A change in the exchange rate for a country's currency alters the prices of

Question

Quizplus · Accepted Answer

A change in exchange rate affects the prices of both exports and imports. When the exchange rate for a country's currency decreases, its exports become cheaper, leading to an increase in demand for its goods from foreign countries. On the other hand, the imports become expensive, leading to a decrease in demand for foreign goods. Conversely, an increase in the exchange rate leads to an increase in demand for foreign goods and a decrease in demand for domestic goods.

A Change in the Exchange Rate for a Country's Currency