Under a system of ﬂexible exchange rates, an increase in the international value of a nation's currency will

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An increase in the international value of a nation's currency, also known as a currency appreciation, will improve its terms of trade. This means that the nation's exports will become relatively more expensive to foreign buyers while its imports will become relatively cheaper for domestic buyers. As a result, the nation's trade balance should improve, leading to a surplus in its balance of payments. Gold is no longer used as a means of settling international payments under a system of flexible exchange rates.

Under a System of ﬂExible Exchange Rates, an Increase in the International