If a domestic currency has depreciated
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 decrease.
D) imports are likely to increase.

Question

Quizplus · Accepted Answer

When a domestic currency depreciates, the value of the currency decreases relative to foreign currencies. This makes domestic-made goods cheaper for foreign buyers, potentially increasing exports, while making foreign-made goods more expensive for domestic consumers, potentially decreasing imports.

If a Domestic Currency Has Depreciated