Suppose a country devalues its currency.If the country's demand for imports is inelastic,the price increase resulting from the devaluation results in a relatively small decrease in the volume of imports,causing to total import expenditures to increase.

Question

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Inelastic demand means that a change in price will result in a proportionately smaller change in quantity demanded. So, if a country devalues its currency and the price of imports increases, the decrease in the volume of imports will be relatively small, and the total import expenditures will increase due to the higher prices.

Suppose a Country Devalues Its Currency