A currency devaluation increases the cost of foreign goods and ____ the cost of domestic goods to foreign firms.
A) Devalues
B) Increases
C) Balances
D) decreases
E) Restricts

Question

Quizplus · Accepted Answer

Currency devaluation causes the domestic currency to lose value relative to other currencies, making foreign goods more expensive. However, it also reduces the cost of domestic goods to foreign firms, making them more competitive and potentially increasing exports. Therefore, the correct answer is D - decreases.

A Currency Devaluation Increases the Cost of Foreign Goods and ____