The depreciation of a country's currency causes the price of imports to

Question

Quizplus · Accepted Answer

When a country's currency depreciates, its value in relation to other currencies decreases. This means that it takes more of the depreciating currency to purchase the same amount of foreign currency. As a result, the price of imports (goods purchased from other countries) increases since it takes more of the depreciated currency to purchase them. On the other hand, the prices of exports (goods sold to other countries) fall since the foreign currency that they are sold for is now worth more in terms of the depreciated currency. Therefore, the correct answer is B.

The Depreciation of a Country's Currency Causes the Price of Imports