Singapore brings in nearly all of its raw materials, and exports make up a high proportion of its GDP. The price elasticity of demand for exports and the price elasticity of demand for imports are both less than 1. What would be the most likely effect of a depreciation of the Singapore dollar?
- AThe domestic inflation rate would fall.
- BThe government’s budget deficit would move to surplus.
- CThe price of imports would fall.
- DThe value of exports would fall.