If the exchange rate appreciates, then the

Question

Quizplus · Accepted Answer

When the exchange rate appreciates, it means that the value of the domestic currency has increased compared to the foreign currency. This leads to foreign goods becoming relatively cheaper and domestic goods becoming relatively more expensive. As a result, people will demand fewer dollars and more foreign currency to take advantage of the lower prices of foreign goods. This will lead to a decrease in the quantity of dollars demanded.

If the Exchange Rate Appreciates, Then the