A firm produces goods for which substitute goods are produced in all countries. Depreciation of the firm's local currency should:

Question

Quizplus · Accepted Answer

Depreciation of the local currency makes the firm's goods cheaper for foreign buyers, potentially increasing exports, and makes foreign goods more expensive, potentially reducing imports. Thus, none of the options correctly describe the effects of currency depreciation.

A Firm Produces Goods for Which Substitute Goods Are Produced