A firm produces goods for which substitute goods are produced in all countries. Depreciation of the firm's local currency should:

Question

Quizplus · Accepted Answer

Depreciation of the local currency makes the firm's goods cheaper for foreign buyers, potentially increasing exports. It also makes foreign goods more expensive locally, which could reduce foreign competition. However, it increases the cost of imports and foreign-denominated expenses, contrary to options B, C, and D.

A Firm Produces Goods for Which Substitute Goods Are Produced