If our exchange rate depreciates, ceteris paribus,
A) exports become cheaper for foreigners, while imports become more expensive for domestic residents; our net exports are likely to increase.
B) exports become more expensive for foreigners, while imports become cheaper for domestic residents; our net exports are likely to decrease.
C) exports become more expensive for foreigners, while imports become cheaper for domestic residents; our net exports are likely to increase.
D) exports become cheaper for foreigners, while imports become more expensive for domestic residents; our net exports are likely to decrease.
Correct Answer:
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