Question : Which of the following is a potential benefit of currency appreciation for an import-dependent economy?
Option 1: Lower import costs.
Option 2: Increased competitiveness of domestic industries.
Option 3: Expansion of export markets.
Option 4: All of the above.
Correct Answer: Lower import costs.
Solution : The correct answer is a) Lower import costs.
When a country's currency appreciates, it means that its value increases relative to other currencies. This can result in lower import costs for an import-dependent economy. With a stronger currency, the cost of imported goods and services becomes relatively cheaper, making them more affordable for domestic consumers and businesses.
Question : Which of the following is a potential drawback of currency appreciation for an export-driven economy?
Question : Depreciation of a country's currency can have a positive impact on its:
Question : A decrease in the real exchange rate implies:
Question : An increase in the nominal exchange rate indicates:
Question : When domestic currency gains value in relation to a foreign currency in the international market, it is termed as a situation of:
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