Country X opts to devalue its currency in order to remove a balance of payments deficit. Why could devaluation have a beneficial impact on its macroeconomy?
- ACompetitive pricing of exports may create employment potential in country X.
- BForeign importers may depreciate their own currencies and reduce any advantage gained by country X.
- CInelastic demand for imported raw materials may lead to cost inflation in country X.
- DLoss of import duties by country X may reduce government backing for trade promotion.