If the currency of a country depreciates, what would likely happen to the National Income? Why?
Depreciation of the currency of a country would increase the nominal value (monetary value) of National Income; since depreciation constitutes a reduction in the relative value of the domestic currency of a country, the tendency is for prices to increase, thereincreasing the nominal value of National Income. Nominal value, in this case, refers to the value of NI at current prices (which have not been adjusted for inflation). This is where
the GNP deflator (the ratio of nominal GNP to real GNP) is required to remove the impact of inflation to give real values.