Which of the following statements is true?
A)A higher exchange rate means cheaper exports and cheaper imports.
B)A higher exchange rate means more expensive exports and more expensive imports.
C)A higher exchange rate means more expensive exports and cheaper imports.
D)A higher exchange rate means cheaper exports and more expensive imports.
E)A higher exchange rate has no effect on the price of exports and imports.

Question

Quizplus · Accepted Answer

A higher exchange rate typically means that the domestic currency is stronger compared to foreign currencies. This makes exports more expensive for foreign buyers (because they have to spend more of their currency to buy the same amount of goods) and imports cheaper for domestic consumers (because they can buy more foreign goods with the same amount of domestic currency).

Which of the Following Statements Is True