A large drop in the price of a primary commodity would tend to cause a _____ shift in the supply of foreign exchange and a(n) _____ of the currency.
A) leftward, appreciation
B) leftward, depreciation
C) rightward, appreciation
D) rightward, depreciation
E) rightward, pegging

Question

Quizplus · Accepted Answer

A large drop in the price of a primary commodity would lead to a decrease in the country's export revenues, reducing the supply of foreign exchange. This would typically cause the currency to depreciate, as there would be less demand for the currency on the global market.

A Large Drop in the Price of a Primary Commodity