When the Domestic Demand for Imports Is Perfectly Inelastic,a Devaluation

question 45

Multiple Choice

When the domestic demand for imports is perfectly inelastic,a devaluation will _______ prices of imports in domestic currency and _________ the total domestic import value.

• A) decrease, decrease
• B) increase, increase
• C) decrease, have no effect on
• D) increase, have no effect on

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Definitions:

Consumer Desire

The inclination or preference of consumers towards certain products or services, which influences their purchasing decisions.

Industry X

A placeholder term used to reference a specific, but unnamed industry or sector within the economy.

Specialization

The process in which individuals, firms, or countries focus on producing a narrow range of products or services, often to improve efficiency and productivity.

Division of Labor

The allocation of different tasks to different people or groups in an effort to increase efficiency and productivity.