If a domestic currency has appreciated
A) foreign-made goods are cheap relative to domestic-made goods.
B) domestic-made goods are cheap relative to foreign-made goods.
C) exports are likely to increase.
D) imports are likely to decrease.

Question

Quizplus · Accepted Answer

When a domestic currency appreciates, it gains value against foreign currencies. This makes foreign-made goods cheaper in terms of the domestic currency, as fewer units of the domestic currency are needed to buy the same amount of foreign currency and, consequently, foreign goods.

If a Domestic Currency Has Appreciated