Correct Answer: downward

Solution : The correct answer is (b) downward.

A trade deficit occurs when a country's imports exceed its exports, meaning that it is buying more goods and services from foreign countries than it is selling to them. This creates a demand for foreign currency to pay for the imports, which puts pressure on the country's own currency. As a result, the value of the country's currency is likely to decrease, or depreciate, relative to other currencies.

The downward pressure on the currency is a result of the imbalance in trade, as the country needs to exchange more of its currency to acquire the foreign currency needed for imports. This depreciation can help make the country's exports relatively cheaper, potentially improving the trade balance over time.