A depreciation of Israel's currency (the shekel) means that
A) Israel's exports will become more expensive
B) Israel's imports will become more expensive
C) Israel's imports will become less expensive
D) it now requires fewer shekels to exchange for one unit of another currency
E) it now requires more of other currencies in exchange for one shekel

Question

Quizplus · Accepted Answer

EWhen a currency depreciates, it loses value relative to other currencies. This makes imports more expensive because it costs more of the depreciated currency to buy the same amount of foreign goods (B). Conversely, it requires more of other currencies to buy one unit of the depreciated currency, not fewer, making choice E correct and D incorrect. Choices A and C are incorrect because a weaker currency actually makes a country's exports cheaper, not more expensive, and imports more expensive, not less.

A Depreciation of Israel's Currency (The Shekel) Means That