Question
In: Economics
In the case of many goods traded, a country can improve its comparative advantage if it decreases the value of its currency
True or False, and Explain why
In the case of many goods traded, a country can improve its comparative advantage if it decreases the value of its currency
Solutions
Expert Solution
Answer- False, as because currency Devaluation help boost trades that too only exports as other countries will buy more as they will a less amount of their currency in exchange moreover it can help in shrinking trade deficits and reducing the interest payments on its outstanding government debts but it will not help to achieve a comparative advantage.
Comparative advantage refers to a situation when a country is able to produce a particular good at a less opportunity cost and currency Devaluation will not help in this.
Rahul Sunny answered 2 years agoRelated Solutions
Q 38, 42, 44 Comparative advantage implies that a country will A. export those goods in...
Q 38, 42, 44
Comparative advantage implies that a country will
A.
export those goods in which the country has a comparative
advantage.
B.
import those goods in which the country has a comparative
advantage.
C.
export those goods in which the country has an absolute
advantage compared to its trading partner.
D.
import those goods in which the country has an absolute
advantage compared to its trading partner.
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