Everything else held constant,increased demand for a country's ________ causes its currency to appreciate in the long run,while increased demand for ________ causes its currency to depreciate.

Question

Quizplus · Accepted Answer

When there is an increase in demand for a country's exports, it means that there are more buyers willing to buy goods and services produced by that country. This causes an increase in demand for the country's currency in order to purchase these exports, resulting in an appreciation of the currency. On the other hand, increased demand for imports means that there is more demand for foreign currency in order to purchase these imports, leading to a depreciation of the country's currency. Therefore, option C is the correct choice.

Everything Else Held Constant,increased Demand for a Country's ________ Causes