If the price of a local currency declines,then it follows:

Question

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If the price of a local currency declines, it means that it takes more units of the local currency to purchase a unit of foreign currency. Therefore, it is equivalent to an increase in the price of the foreign currency. Option A is incorrect because a decrease in the domestic currency actually leads to price increases for foreign goods. Option C is incorrect because a decline in the domestic currency will lead to an increase in the demand for foreign currency. Option D is incorrect because a decline in the domestic currency usually leads to a decrease in the quantity supplied as it becomes less profitable for suppliers to produce goods for export.

If the Price of a Local Currency Declines,then It Follows