Which two factors are most likely to negate the competitive advantage gained from a currency devaluation?

Show Answers

Increased costs of imports and rising wage levelsReduced prices for exports and decreased import quantitiesHigher import expenses and falling export pricesGreater wage hikes and reduced import volumes

Explanation

The benefit of a devaluation in improving competitiveness is often counterbalanced by increased import prices, which raise costs, and by higher wage demands, which can erode cost advantages.