Suppose the Australian dollar increases substantially in value relative to other currencies. What is the likely result?
A) Australian exports will decrease and imports will increase
B) Australian exports will increase and imports will decrease
C) Australian exports will decrease and imports will decrease
D) Australian exports will increase and imports will increase

Question

Quizplus · Accepted Answer

When the Australian dollar increases in value relative to other currencies, Australian goods become more expensive for foreign buyers, leading to a decrease in exports. Conversely, foreign goods become cheaper for Australian consumers, leading to an increase in imports.

Suppose the Australian Dollar Increases Substantially in Value Relative to Other