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?

Question

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 for New Zealand goods can’t be determined
The U.K’s demand for New Zealand goods will decline

Answer 1

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