An appreciation of a country's currency

Question

Quizplus · Accepted Answer

When a country's currency appreciates, it becomes more expensive in terms of other currencies. This means that the prices of its exports increase while the prices of its imports decrease. Therefore, a country's exports become relatively expensive, while its imports become relatively cheap. This leads to an increase in the relative price of its exports and a decrease in the relative price of its imports. Hence, the best option is D.

An Appreciation of a Country's Currency