A real depreciation of the domestic currency will

Name: A real depreciation of the domestic currency will
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Question

Quizplus · Accepted Answer

A real depreciation of the domestic currency makes exports cheaper and imports more expensive, which can improve the trade balance by increasing exports and decreasing imports. This improvement in the trade balance can also increase aggregate demand as domestic production rises to meet both the increased demand for exports and the reduced competition from imports.

A Real Depreciation of the Domestic Currency Will