economics hard Fill in the Blank

When a country's currency depreciates, its exports become ___ expensive for foreign buyers, theoretically improving the trade balance.

  1. less
  2. rivalrous (or unregulated common)
  3. 40
  4. public

Answer: less

Currency depreciation means it takes fewer units of foreign currency to buy the domestic currency. Consequently, domestic goods become cheaper in international markets, boosting export volumes. However, this relies on the Marshall-Lerner condition, which requires the sum of export and import elasticities to be greater than one.

Topic International Economics - Exchange Rates
Exam Relevance UPSC Prelims, SSC CGL, Banking
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