When a country imports more than it exports, the currency might be expected to weaken.

Question

Quizplus · Accepted Answer

When a country imports more than it exports, it means that there is a net outflow of the domestic currency to foreign countries to pay for the imports. This can increase the supply of the domestic currency in the foreign exchange market, which can lead to a decrease in its value relative to other currencies. Therefore, a trade deficit can often lead to a weaker currency.

When a Country Imports More Than It Exports, the Currency