If U.S.export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency,a devaluation of the dollar during the currency contract period
A)should increase the dollar value of exports.
B)should not have any effect on the dollar value of U.S. imports.
C)must increase the BOT.
D)All of the above

Question

Quizplus · Accepted Answer

A devaluation of the dollar makes U.S. exports cheaper in terms of foreign currencies, thus potentially increasing the dollar value of exports. Since import contracts are denominated in domestic currency, their dollar cost remains unchanged, regardless of the dollar's devaluation. Both effects can improve the Balance of Trade (BOT) by increasing exports and maintaining the cost of imports.

If USexport Contracts Are Written in Terms of Foreign Currency and and Import