Assertion (A): Devaluation of a currency may promote export. Reason (R): Price of the country’s products in the international market may fall due to devaluation.
- ABoth A and R are true, and R is the correct explanation of ACorrect
- BBoth A and R are true, but R is not a correct explanation of A
- CA is true, but R is false
- DA is false, but R is true
Explanation
The correct option is A because devaluation directly impacts the relative pricing of a countrys goods abroad.
When a country devalues its currency, its value decreases compared to foreign currencies. This means foreign buyers need less of their own currency to purchase the same amount of the devalued currency, making the countrys products cheaper in international markets.
Because the products become more price competitive, the demand for these goods typically increases, which promotes and boosts exports. Therefore, the reason provided directly explains the mechanism behind the assertion.
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