The correct answer is Option (2) → (A), (B), (C), (D)
Devaluation refers to the deliberate downward adjustment of the value of a country's domestic currency under a fixed exchange rate system.
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(A) Exchange rate is fixed: Devaluation is the act of lowering the value of a currency in a system where the exchange rate is (or was) officially fixed. After devaluation, the exchange rate is typically fixed again at a new, lower level. Therefore, the characteristic of the exchange rate being fixed describes the nature of the system in which devaluation occurs and to which it returns. In this context, it can be considered a relevant outcome or characteristic. Correct.
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(B) Indian Government increases the exchange rate: In countries like India, the exchange rate is often expressed as the number of domestic currency units per unit of foreign currency (e.g., 80 INR per 1 USD). When the domestic currency is devalued, it means more Indian Rupees are needed to buy one US Dollar. For example, if the rate changes from 70 INR/USD to 75 INR/USD, the numerical value of the exchange rate has increased. This is a direct policy action. Correct.
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(C) Domestic currency become cheaper: If the exchange rate increases from 70 INR/USD to 75 INR/USD, it means the Indian Rupee is now worth less in terms of foreign currency. For example, 1 Rupee can now buy less of a foreign currency than before. Thus, the domestic currency has become cheaper for foreigners. Correct.
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(D) The Exports of India will rise: When the domestic currency becomes cheaper, goods and services produced in India become relatively less expensive for foreign buyers. This increased affordability typically boosts the demand for Indian exports in international markets, leading to a rise in exports (assuming demand is elastic). Correct.
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