Consider the following statements:
- 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.
Options:
- Both A and R are true, and R is the correct explanation of A
- Both A and R are true, but R is not a correct explanation of A
- A is true, but R is false
- A is false, but R is true
Explanation
Option (a) is correct
- Devaluation lowers the value of a country’s currency relative to foreign currencies. As a result, the country’s exports become cheaper in the international market, making them more competitive and increasing export demand. Therefore, both the Assertion and the Reason are true, and the Reason correctly explains the Assertion.
