General Knowledge - Indian Economy - Discussion

Discussion :: Indian Economy - Indian Economy (Q.No.43)

43. 

Devaluation of currency will be more beneficial if

[A]. prices of domestic goods remain constant
[B]. prices of exports remain constant
[C]. prices of imports remains constant
[D]. prices of exports rise proportionately

Answer: Option B

Explanation:

No answer description available for this question.

Sushil said: (Jan 21, 2011)  
how , plz explain if anyone knows

Bharath said: (Jun 1, 2011)  
Devaluation of currency is reducing the value of the currency compared to the other currencies in the international market. Now if you devalue the currency of a particular country which has a robust export system then it means you are exporting healthily thereby keeping the competitive edge over other countries exporting the same goods at their currency values. I hope this helped.

Arun said: (Aug 14, 2011)  
For example. If value of rupee is devaluated against dollar, then in the angle of american importers the price of goods will be increased. Right? I m not sure about my view. Some one help me out. How comes price of export remains constant?

Rajni said: (Sep 10, 2011)  
By devaluation we can sell our product at lower prices as comparetive to other countries but supose if the prices of exports don't remain constant and they rise then there is no profit of doing devaluation because your product is still of a high cost due to prices not remain constant.

Alka said: (Oct 30, 2011)  
Devaluation means price of rupees reduced in comparison of other currency it is beneficial when export increased.

Manisha Khetwal said: (Mar 30, 2013)  
Devaluation means price of rupees reduced it must help when export increase. This means that other countries will purchase more and more commodity and this will automatically tend to increase in economy.

Pankaj Adhikari said: (Jun 24, 2013)  
Suppose you export a good in 500 rupees a month before and suppose cost of export be constant, then if the price was 50 against a dollar and if devaluation occurs and price reduced to 40 against 1 dollar than than you export same good in 400 rupees against same amount in dollar.

Madhav Somvamnshi said: (Jul 23, 2013)  
Central government has devaluation of Indian currency in 1948, 1966 and 1991 The main reason is to increase export of goods.

Diggi said: (Aug 18, 2013)  
I am not in agreement with above mentioned example @Pankaj. Here we are talking about devaluation means we can take live example of rupee depreciation.

So for example suppose if month before we sold any goods for rupee 55 means we received one dollar against this however after depreciation of Indian rupee if we sell the same and get 1 dollar again(today 1$ =62 rupee) we are making profit of rupee 7. Answer b is right hope I am clear to all.

Sowmya said: (Jun 6, 2014)  
Devaluation is nothing but reducing in the value of current money this is taken to discourage imports and increase exports. For ex devaluation gives two sides benefits it helps to make profit and discourage imports for ex if the value of rupee is 50 after devaluation it decrease to 45 then to purchase the goods we need spend more money because the value of money is more in other country so it tries to reduce its imports to have control on the outflow of the domestic money.

Murali said: (Aug 20, 2014)  
Devaluation makes exports cheaper and imports costlier. It means the export value of a product decreases but it is good for economy because exports increases. So we would be even more beneficial if the export value remain constant rather than depreciating.

Varun said: (Nov 1, 2014)  
Only IT companies will get benefit by devaluation, whereas other sectors will not, so how come it is profitable for a country?

As we are top importers of petrol and gold.

Anand said: (Mar 7, 2015)  
By doing devaluation Forex reserves may rise as export price remains constant.

Hemal said: (Mar 29, 2015)  
Beneficially mean get something more than calculated profit on certain type of trade transaction. Here net-off of two type of trade asked import and export both.

So, its beneficial if price of export remain same i.e. production cost remain same even though its depend on import item.

He Man said: (Jun 1, 2016)  
Because of devaluation, the import prices will increase and the export price will become lower.

Raj said: (Aug 27, 2016)  
Hence devaluation is beneficial for export-oriented countries. So it will be more beneficial if the export price of a commodity reduces in comparison to other countries as this will reduce the price of a commodity in the foriegn market.

P. Rajasekharan Nair said: (Sep 8, 2017)  
Devaluation of domestic currency is a deliberate step taken by the Government mainly to reduce the value of domestic currency against the king currencies of the world. It is to be ratified by the International Monetary Fund (IMF). The purpose is to boost the exports to correct the fundamental disequilibrium in balance of payments. At that time, the prices of exports must remain the same. Let us discuss with an illustration. For example if Indian currency is devalued against American dollar, the value of American dollar in terms of Indian currency would go up. By keeping the export price constant, Americans could now be able to purchase more of Indian goods in foreign trade (because the value of American currency has relatively increased). This would be possible only if the export price remains constant. If it doesn't remain constant, the value of American currency will become flexible and will not respond to decrease in value of Indian currency. As a result, the purpose will not be served. Simultaneously, the value (price) of American goods would be more costlier to Indians. This will help to reduce imports. This is possible only in liberal trade conditions and therefore the policy of protection should not apply. There should be no retaliatory measure from the opposite side. Hence the prices of exports remain constant.

Pardeep Kaur said: (Jan 22, 2018)  
No, I think the devaluation of currencies boosts the export. China do this.

Krishna said: (Jun 5, 2018)  
Devaluation of a currency is more successful price elasticity demand is proportional then only devaluation of a currency will success other wise it will fail.

Rohit Joshi said: (Jul 7, 2018)  
Devalue is the reduction in the value of the currency, if the export remains constant then it will not increase the surplus of the country (not beneficial for the growth).

However, to increase the surplus, country has to increase the export volume and moreover, it will impact on deficit.

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