A depreciation of the Pakistani rupee, other conditions remaining unchanged, is most likely to:
Correct answer: B. Make imports more expensive and exports more competitive
- A. Make imports cheaper and exports more expensive
- B. Make imports more expensive and exports more competitive
- C. Reduce the rupee value of foreign debt
- D. Eliminate the country's trade deficit immediately
Explanation
A weaker rupee raises the domestic price of imported goods and can make Pakistani goods cheaper for foreign buyers. It does not automatically remove a trade deficit because trade quantities adjust with time.
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About Economy of Pakistan
Pakistan's economy is examined through agriculture, industry, services, trade, remittances, employment, population, poverty and regional development. The topic also covers GDP and national income, inflation, fiscal and monetary policy, taxation, public debt, the balance of payments, energy constraints and structural challenges, including the role of the State Bank and development planning.
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