A government chooses to devalue the country’s currency in order to eliminate the deficit on the current account of the balance of payments. What is the most likely reason that this would fail to work?
- AThe country gains a competitive advantage from the devaluation.
- BThe country has a surplus on its capital and financial accounts.
- CThe price elasticities of demand for the country’s exports and imports are greater than one.
- DThere are high trade barriers with the country’s main trading partners.