The competitive advantage from a devaluation is likely to be offset by _______ and ________?
Correct answer: A. higher import prices, higher wages increases
- A. higher import prices, higher wages increases
- B. lower export prices, lower imports volumes
- C. higher import prices, lower export prices
- D. higher wage increases lower import volumes
Explanation
Devaluation makes imports more expensive and can raise domestic wages and costs, producing inflation. These effects erode the original price advantage gained by exporters.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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