For a firm that competes internationally to sell its products, a depreciation of its domestic currency relative to markets where the firm exports goods, should eventually result in ________ sales at home and ________ sales abroad, other things equal.
A) fewer; greater
B) fewer; fewer
C) greater; greater
D) greater; fewer

Question

Quizplus · Accepted Answer

A depreciation of the domestic currency makes the firm's products cheaper in foreign markets, potentially increasing sales abroad. At the same time, imported goods become more expensive, which can lead to greater sales at home as consumers may prefer domestic products.

For a Firm That Competes Internationally to Sell Its Products