If a country's exchange rate appreciates, the world price level:
A) rises.
B) falls.
C) remains unchanged.
D) could rise or fall.

Question

Quizplus · Accepted Answer

When a country's exchange rate appreciates, its currency becomes stronger relative to other currencies, making imports cheaper and exports more expensive. This typically leads to a decrease in the world price level as the cost of goods and services from that country becomes cheaper for foreign buyers.

If a Country's Exchange Rate Appreciates, the World Price Level