A depreciation in a country's currency will immediately reduce its trade deficit.

Question

Quizplus · Accepted Answer

A currency depreciation may make a country's exports cheaper and more competitive, but it also makes imports more expensive. This may result in an increase in the trade deficit, rather than a reduction. Other factors, such as the elasticity of demand for imports and exports, also play a role in determining the effect of a currency depreciation on the trade deficit.

A Depreciation in a Country's Currency Will Immediately Reduce Its