{"id":30135,"date":"2024-02-27T08:02:57","date_gmt":"2024-02-27T08:02:57","guid":{"rendered":"https:\/\/edukemy.com\/blog\/?p=30135"},"modified":"2024-02-27T08:02:59","modified_gmt":"2024-02-27T08:02:59","slug":"upsc-prelims-2021-question-58","status":"publish","type":"post","link":"https:\/\/edukemy.com\/blog\/upsc-prelims-2021-question-58\/","title":{"rendered":"UPSC Prelims 2021 &#8211; Question 58"},"content":{"rendered":"\n<figure class=\"wp-block-image size-full is-resized\"><a href=\"https:\/\/edukemy.com\/upsc\/upsc-prelims-test-series?utm_source=Blog&amp;utm_medium=Blog&amp;utm_campaign=Blog-%20PTS\" target=\"_blank\" rel=\"noreferrer noopener\"><img fetchpriority=\"high\" decoding=\"async\" src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/02\/Prelims-Test-Series-eng-and-hindi-1280\u00d7330.svg\" alt=\"UPSC Prelims Mock Test - ECONOMY 2\" class=\"wp-image-24924\" width=\"779\" height=\"199\"\/><\/a><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6a576a8a07f61\" class=\"ez-toc-cssicon-toggle-label\"><p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a576a8a07f61\"  \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/edukemy.com\/blog\/upsc-prelims-2021-question-58\/#Q58_Consider_the_following_statements_The_effect_of_devaluation_of_a_currency_is_that_it_necessarily\" >Q58. Consider the following statements: The effect of devaluation of a currency is that it necessarily<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Q58_Consider_the_following_statements_The_effect_of_devaluation_of_a_currency_is_that_it_necessarily\"><\/span>Q58. Consider the following statements: The effect of devaluation of a currency is that it necessarily<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ol class=\"wp-block-list\"><li>Improves the competitiveness of domestic exports in foreign markets<\/li><li>Increases the foreign value of domestic currency<\/li><li>Improves the trade balance<\/li><\/ol>\n\n\n\n<p>Which of the above statements is\/are correct?<br>a) 1 only<br>b) 1 and 2<br>c) 3 only<br>d) 2 and 3<\/p>\n\n\n\n<p>Answer: (a) <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Statement 1 is correct:<\/strong> A key effect of devaluation is that it makes the domestic currency cheaper relative to other currencies. There are two implications of a devaluation. First, devaluation makes the country\u2019s exports relatively less expensive for foreigners. Second, the devaluation makes products more expensive for domestic consumers, thus discouraging imports. This may help to increase the country\u2019s exports and decrease imports, and may therefore help to reduce the current account deficit.<\/li><li><strong>Statements 2 and 3 are incorrect: <\/strong>Devaluation of a currency decreases the foreign value of the domestic currency<\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image size-full\"><a href=\"https:\/\/edukemy.com\/free-resources-for-upsc?utm_source=Blog&amp;utm_medium=Banner&amp;utm_campaign=Resources\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" width=\"1280\" height=\"300\" data-src=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/18.png\" alt=\"\" class=\"wp-image-42398 lazyload\" data-srcset=\"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/18.png 1280w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/18-1170x274.png 1170w, https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/06\/18-585x137.png 585w\" data-sizes=\"(max-width: 1280px) 100vw, 1280px\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 1280px; --smush-placeholder-aspect-ratio: 1280\/300;\" \/><\/a><\/figure>\n\n\n\n<p>For UPSC Prelims Resources,&nbsp;<a href=\"https:\/\/edukemy.com\/upsc-cse-prelims-resource-centre\" target=\"_blank\" rel=\"noreferrer noopener\">Click here<\/a><\/p>\n\n\n\n<p>For Daily Updates and Study Material:<\/p>\n\n\n\n<p>Join our Telegram Channel \u2013&nbsp;<a href=\"https:\/\/t.me\/WithEdukemy4IAS\" target=\"_blank\" rel=\"noreferrer noopener\">Edukemy for IAS<\/a><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>1. 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Consider the following statements: The effect of devaluation of a currency is that it necessarily<\/p>\n<p>Improves the competitiveness of domestic exports<\/p>\n","protected":false},"author":17,"featured_media":30144,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[1644],"tags":[232,515,231],"class_list":["post-30135","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-upsc-prelims","tag-upsc","tag-upsc-cse","tag-upsc-prelims"],"aioseo_notices":[],"aioseo_head":"\n\t\t<!-- All in One SEO 4.9.9 - aioseo.com -->\n\t<meta name=\"description\" content=\"Q58. 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Consider the following statements: The effect of devaluation of a currency is that it necessarily Improves the competitiveness of domestic exports","og:url":"https:\/\/edukemy.com\/blog\/upsc-prelims-2021-question-58\/","og:image":"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/12\/edukemy-logo-horizontal.jpg","og:image:secure_url":"https:\/\/edukemy.com\/blog\/wp-content\/uploads\/2024\/12\/edukemy-logo-horizontal.jpg","og:image:width":512,"og:image:height":157,"article:published_time":"2024-02-27T08:02:57+00:00","article:modified_time":"2024-02-27T08:02:59+00:00","article:publisher":"https:\/\/www.facebook.com\/edukemy\/","twitter:card":"summary_large_image","twitter:site":"@EdukemyOfficial","twitter:title":"UPSC Prelims 2021 - Question 58","twitter:description":"Q58. 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