Question

If a country currency "appreciates", one likely problem that would cause is
A. it will make imports to that country more expensive
B. it will make exports from that country more expensive
C. it will trigger cost-push inflation
D. it will trigger a severe recession

Answer 1

B

When a country's currency appreciates, foreign buyers must pay more of their currency to buy the same domestic goods, making that country's exports relatively more expensive. (Imports become cheaper, so A and C are incorrect; D is not a necessary outcome.)