[Solved] If a country devalues its currency, its - (1)

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Q.	If a country devalues its currency, its - (1)
A.	Exports become cheaper and imports become costlier
B.	(2) Exports become costlier and imports become cheaper.
C.	Exports value is equivalent to imports value
D.	No effect on exports and imports
Answer» A. Exports become cheaper and imports become costlier
Explanation: Devaluation means official lowering of the value of a country's currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. Devaluation causes a country's exports to become less expensive, making them more competitive in the global market. This, in turn, means that imports are more expensive, making domestic consumers less likely to purchase them.

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