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Q. Which of the following will be the outcome if an economy is under the inflationary pressure?1.Domestic currency heads for depreciation.2.Exports become less competitive with imports getting costlier.3.Cost of borrowing decreases.4.Bondholders get benefittedSelect the correct answer using the code given below.

A) 2 and 3

B) 1 and 2

C) 1, 3 and 4

D) 1 and 3 only

1 and 3 only

Additional Information > Exam point of View

Under inflationary pressure, domestic currency depreciates, exports become less competitive, and imports become costlier, leading to a trade imbalance.

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