Depreciation boosts £ value of fixed $ revenues

Steps:

• £ sterling depreciates 10% against $, so$1 now buys 10% more £.
• Exporter keeps $price unchanged, so$ revenue from US sales remains the same.
• Quantity sold assumed constant (other things equal).
• £ revenue = $revenue × exchange rate (£ per$), which rises 10%.

Why A is correct:

• Currency depreciation formula: £ revenue increases proportionally when foreign currency revenue is fixed, as each $ converts to more £.

Why the others are wrong:

• B: £ revenue rises due to favorable exchange rate, not falls.
• C: Exchange rate change directly alters £ value of $ inflows.
• D: Effect is mechanical from exchange rate, independent of demand elasticity here.

Final answer: A