Question #8

Consider the following statements:

The effect of devaluation of a currency is that it necessarily

1. improves the competitiveness of the domestic exports in the foreign markets

2. increases the foreign value of domestic currency

3. improves the trade balance

Which of the above statements is/are correct?

1. 1 only
2. 1 and 2
3. 3 only
4. 2 and 3