In the short run a currency depreciation can make a trade balance worse if
A)there is no domestic producer of an import.
B)there is no domestic buyer for an import.
C)there is no export market for a country's output.
D)none of the options

Question

Quizplus · Accepted Answer

When there is no domestic producer of an import, a currency depreciation makes imports more expensive without providing a domestic alternative, potentially worsening the trade balance as the country continues to import necessary goods at higher prices.

In the Short Run a Currency Depreciation Can Make a Trade