UPSC Prelims 1999 · General Studies

Question 99: Economy and Social Development

Assertion (A): Devaluation of a currency may promote export. Reason (R): Price of the country's products in the international market may fall due to devaluation.

aBoth A and R are true, and R is the correct explanation of A

bBoth A and R are true, but R is not a correct explanation of A

cA is true, but R is false

dA is false, but R is true

AnswerThe answer is (a).

Devaluation lowers the value of the home currency against foreign currencies. A country's goods then cost less in foreign currency, so foreign buyers find them cheaper and exports may rise, while imports become dearer. Both A and R are true, and R is the reason for A. Remember: cheaper currency, cheaper exports, dearer imports.

A. Devaluation may promote exports.
R. Devaluation can lower the international price of the country's goods.

How you could have got this

If you were sure statement 1 is correct, (d) goes. Then judge the second statement; if it is correct too, decide whether it explains the first.

This follows an unofficial answer: UPSC has not published its key for this year, and if that answer is wrong, so is this path.

Which options go is worked out from UPSC’s key and the options, not by a model.

Why each option is right or wrong

(a) Right. Both are true and R explains A.
(b) Wrong. R does explain A.
(c) Wrong. R is true.
(d) Wrong. A is true.

Explanation: written by UPSC Grade, not by UPSC.

Practise this paper timedPrevious question Next question

Source: UPSC, Civil Services (Preliminary) Examination 1999, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.