A depreciation of a nation's currency would cause
A)the nation's imports to increase and exports to decline.
B)the nation's exports to increase and imports to decline.
C)both imports and exports to decline.
D)both imports and exports to rise.

Question

Quizplus · Accepted Answer

A depreciation of a nation's currency makes its exports cheaper and more attractive to foreign buyers, which should lead to an increase in exports. At the same time, imports become more expensive, causing a decline in imports. Therefore, choice B is the correct answer.

A Depreciation of a Nation's Currency Would Cause