A decrease in value of a country's currency relative to other currencies affects its balance of trade on goods and services by:
A)raising imports, reducing exports, and reducing the balance of trade on goods and services.
B)reducing imports, raising exports, and reducing the balance of trade on goods and services.
C)reducing imports, raising exports, and increasing the balance of trade on goods and services.
D)raising imports, reducing exports, and increasing the balance of trade on goods and services.

Question

Quizplus · Accepted Answer

A decrease in the value of a country's currency makes its goods and services cheaper for foreigners, leading to an increase in exports. Simultaneously, foreign goods and services become more expensive for residents, leading to a decrease in imports. This combination improves the balance of trade on goods and services.

A Decrease in Value of a Country's Currency Relative to Other