The United Kingdom currently has a trade deficit with New Zealand. If the U.K. pound sterling appreciates relative to the New Zealand dollar, which of the following correctly explains the effect on the U.K.'s demand for goods from New Zealand?(1 point)

Question

Responses

The U.K.'s demand for New Zealand goods can't be determined.
The U.K.'s demand for New Zealand goods can't be determined.

The U.K.'s demand for New Zealand goods will rise.
The U.K.'s demand for New Zealand goods will rise.

The U.K.'s demand will remain the same.
The U.K.'s demand will remain the same.

The U.K.'s demand for New Zealand goods will decline.

Answer 1

If the U.K. pound sterling appreciates relative to the New Zealand dollar, it means that the pound can buy more New Zealand dollars than before. This generally makes New Zealand goods more expensive for U.K. consumers, while New Zealand consumers will find U.K. goods relatively cheaper.

As a result, the U.K.'s demand for New Zealand goods will decline. Therefore, the correct response is:

The U.K.'s demand for New Zealand goods will decline.