Why does the depreciation of a country's currency tend to increase its price level?
A) domestic buyers tend to substitute imports for domestic products
B) a currency depreciation makes a country's products less competitive in world markets, so exports fall
C) a currency depreciation makes imported inputs more expensive
D) a currency depreciation makes imported inputs less expensive
Correct Answer:
Verified
Q253: Floating exchange rates are determined by
A) each
Q254: Purchasing goods produced in another country is
Q255: Fewer Italian companies start to invest in
Q256: An increase in U.S. exports to Mexico
Q257: The law of one price states that
Q259: An increase in U.S. imports from Switzerland
Q260: The openness of the economy and flexible
Q261: If a nation's interest rates are relatively
Q262: If the Fed increases the money supply
Q263: The _ the economy and _ exchange
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