Explain the Concept of Devaluation,and Explain the Effect Devaluation Has

question 78

Essay

Explain the concept of devaluation,and explain the effect devaluation has on the price of a country's imports.Discuss how international companies can adjust to a weak currency.

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Definitions:

Price Inelastic

A situation where the demand for a good or service does not change significantly when its price changes.

Negative Cross Elasticity

A situation where the demand for one product decreases as the price of another product decreases, indicating complementary goods.

Income Inelastic

Describes a good or service whose demand does not significantly change with a change in consumers' income.