Trading in foreign currencies has an effect on world trade. For example, a rise in the value of the local currency due to daily flows vis-à-vis other currencies makes
Exports:
A) less expensive.
B) more expensive.
C) come under government control.
D) parallel with imports.
E) be banned.

Question

Quizplus · Accepted Answer

A rise in the value of the local currency makes exports more expensive. This is because the cost of producing goods and services in the local currency remains the same, but when the value of the currency increases, the prices of those goods and services increase when compared to other currencies. As a result, foreign buyers will have to pay more for the same goods and services, making exports more expensive.

Trading in Foreign Currencies Has an Effect on World Trade