Net Exports - AP Macroeconomics

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Question

A depreciation in the value of a nation's currency will lead to what?

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Answer

A devaluation of a currency makes a nation's goods cost less to holders of foreign currency. Since the goods are now cheaper, there will be an increase in the quantity of goods demanded by holders of foreign currency. More foreigners buying goods means those goods must be shipped to them leading to an increase in exports.

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