In the long run, both exports and imports tend to be
A)unresponsive to changes in exchange rates.
B)responsive to changes in exchange rates.
C)both a and b
D)none of the above

Question

Quizplus · Accepted Answer

As exchange rates change, the prices of goods and services also change. As a result, imports become cheaper when a country's currency depreciates, while exports become more expensive. Changes in exchange rates have a significant effect on the volume of international trade, causing both exports and imports to be responsive to exchange rate dynamics.

In the Long Run, Both Exports and Imports Tend to Be