Question
Other things being equal, an appreciation of the domestic currency:
lowers the domestic price of imported goods.
raises the domestic price of imported goods.
lowers the world price of imported goods.
lowers the value of our currency in a foreign country
lowers the domestic price of imported goods.
raises the domestic price of imported goods.
lowers the world price of imported goods.
lowers the value of our currency in a foreign country
Answers
GPT-4o mini
An appreciation of the domestic currency means that the currency has increased in value relative to other currencies. This typically leads to the following implication:
- **Lowers the domestic price of imported goods.**
When the domestic currency appreciates, it takes fewer units of the domestic currency to purchase the same amount of foreign goods. As a result, imported goods become cheaper for consumers in the domestic market.
Therefore, the correct statement is that an appreciation of the domestic currency lowers the domestic price of imported goods.
- **Lowers the domestic price of imported goods.**
When the domestic currency appreciates, it takes fewer units of the domestic currency to purchase the same amount of foreign goods. As a result, imported goods become cheaper for consumers in the domestic market.
Therefore, the correct statement is that an appreciation of the domestic currency lowers the domestic price of imported goods.