When exchange rates change and prices stay the same:
A) relative prices of traded goods in the two nations are unchanged.
B) the price of foreign goods expressed in the home currency will always rise.
C) imports get more expensive as the home currency depreciates.
D) the price of foreign goods expressed in the home currency will always fall.

Question

Quizplus · Accepted Answer

When the home currency depreciates, it means that you need more of the home currency to buy the same amount of foreign currency. This makes imports (which are priced in foreign currency) more expensive when converted back to the home currency.

When Exchange Rates Change and Prices Stay the Same