GCE Economics 2024 Objective — Question 45

Question 45 of 50 from the General Certificate of Education (GCE) Economics 2024 Objective paper, with the correct answer and a full explanation.

Devaluation of currency will help to correct a balance of payments deficit if a country's

A. A. exports have perfectly inelastic demand
B. B. imports have inelastic demand
C. C. exports have elastic demandCorrect
D. D. productivity is low

Explanation

Devaluation of currency is a reduction in the currency of a country in relation to another country's currency. However, this will be effective when the demand for the country's commodities i.e Export is fairly elastic. Devaluation will increase export and it will reduce import.

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