If the price of home currency falls relative to the prices of foreign currencies as a result of central bank action, the home country's exports will become more costly relative to imports from abroad, resulting in less domestic production, fewer jobs and lower incomes.

Question

Quizplus · Accepted Answer

When the price of home currency falls relative to foreign currencies, it makes the home country's exports cheaper and imports more expensive. This can lead to an increase in exports and a decrease in imports, potentially boosting domestic production, creating more jobs, and increasing incomes.

If the Price of Home Currency Falls Relative to the Prices