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Devaluation of currency leads to:

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fall in domestic prices

erratic fluctuations in domestic prices

increase in domestic prices

no impact on domestic prices

answer is B.

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Detailed Solution

Devaluation of currency leads to increase in domestic prices.

Devaluation increases domestic import and export prices, as well as the prices of import alternatives, potential exports, and intermediate commodities needed for their production.

Imports and international trips will be more expensive for home inhabitants. However, the decrease in the cost of exports will help domestic exports.

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