Why does the decline in value of a certain currency cause imports to be expensive and exports cheaper, resulting in cost-push and demand-pull inflation?

Q: The United States and the countries of Europe are trading partners. If the average income of dollar…

A: Here, it is given that the average income of US citizens has increased when US and Europe are…

Q: If a country imports more than it exports, it has a trade deficit. True or false

A: Balance of payments is the difference between the the value of the trade exports and imports in the…

Q: Which of the following would cause exports to rise?        A) A depreciation of the exchange rate…

A: A weaker domestic currency invigorates products and makes imports more costly; on the other hand,…

Q: What can international business people do to protect their companies from increasing inflation and a…

A: International business have to be very careful in making cost and business expansion decisions,when…

Q: Why is it important for the balance of payments to balance in the long run?

A: Balance of Payment of a country is the summary of all economic transactions of the country with the…

Q: Do you think that the balance of economic power in the world has started to shift from west to east?

A: Economic power means having impact to a great extent since the country is able to produce, sell or…

Q: Thailand is a net-importer. This means that they import more than they export. How does this affect…

A: The exchange rate refers to the rate at which currency of one country can be exchanged with the…

Q: What will happen if the price of US dollars declines considerably against the Japanese yen then: a)…

A: Exchange rate is the rate of exchange of two currencies. It means that it is the rate at which one…

Q: What effect does a high exchange rate have on imports, exports, and that country's production?

A: The rate that measures the value of a nation’s currency in terms of another nation’s currency is…

Q: What impact will an appreciation of the dollar have on the relative price of foreign goods to…

A: If the dollar appreciates, then the exchange rate increases. The relative price of domestic goods…

Q: In 2007 and 2008, the international value of the dollar fell. This development was viewed with alarm…

A: Exchange rates play a major role in deciding the imports and exports of a country where the imports…

Q: What will happen if the people expect that the value of a currency will increase? a. There will be…

A: The value of a currency is its market value based on its demand and supply in the international…

Q: Imports of goods and services is not a source of demand for foreign exchange True/False

A: The requirements for foreign currency to cover the payments is refferd to be as the demand for…

Q: Just a couple of years after the economic crisis, Spain managed to reduce their trade deficit, was…

A: Spain applied a policy of depreciating the value of its currency, this makes the prices of goods…

Q: Rapid increases in the U.S. exports of goods and services will result in a(n) U.S. dollars in the…

A: Exports and imports of goods and services have an effect on the exchange rate value of the domestic…

Q: an increase of the international value of the US dollar will most likely benefit  a) domestic…

A: International trade agreements govern the exchange of goods and services between two or more…

Q: How a devaluation may reduce the trade deficit of a country? What condition is required to reduce…

A: Devaluation is the fall in the value of a country's currency. As a result of fall in exchange rate,…

Q: If the value of exports are 11,000 and the value of imports are 3000 find  the balance of trade?

A: Given information:- Imports  = 3000 Exports   = 11000    Balance of trade is difference between…

Q: How does a fall in the exchange rate cause an increase in the cost of raw imported materials?

A: The import and export of a country are affected by the exchange rates.

Q: What is it called when country import prices gain relative to that of its export prices?

A: Terms of trade (TOT) address the proportion between a nation's fare costs and its import costs. At…

Q: Which among the following will create the Supply of foreign exchange in Oman? By importing more…

A: Option (2).

Q: If imports exceed exports, as in recent years, then __________ exists.   a trade surplus a trade…

A: Trade balance depends on the difference between exports and imports.

Q: Balance of trade

A: International commerce enables governments to open new markets for goods and services that would…

Q: hich of the following increases the demand for foreign exchange? a. Export of goods and services…

A: Foreign exchange demand is increased when the country pay more amount of money to other nation by…

Q: When the dollar decreases in value relative to other currencies, which group (exporters/importers)…

A: A weaker domestic currency stimulates exports and makes imports more expensive. A falling dollar…

Q: In recent years, China has helped make its currency ____ by ____ U.S. dollars. stronger; buying…

A: The answer is - (a) stronger; buying In recent years, China has helped make its currency…

Q: difference between balance of trade and balance of payments?

A: Money has been evolved since the ancient times and currently money is used as currency. There are…

Q: Would cappuccino by the cup or Prada handbags have wider price variation in a free trade area like…

A: Free trade area refers to the area where goods and services can move from one place to other easily…

Q: What are two ways in which monetary policies and tight budgets allow a fixed exchange rate system to…

A: the AA-DD model to portray the impacts of financial, monetary, and exchange rate policy under an…

Q: Fixed exchange rate vs fixable exchange rate

A: The economy which does not trade with other economies is called a closed economy. However,…

Q: When incomes rise, imports tend to a) behave in an unpredictable manner b) fall c) rise d) stay…

A: Answer in Step 2

Q: Is it fair for China to fix its currency by undervaluing it on the market? How does keeping its…

A: China is a large open economy that makes international trade under a fixed or pegged exchange rate…

Q: If the Japanese yen appreciates against the U.S. dollar a. Americans should find Japanese goods are…

A: The exchange rate is the price of the currency of one country in terms of another country’s…

Q: Under what conditions will a larger budget deficit cause a trade deficit?

A: Budget deficit occurs when the government expenditure exceeds the government revenue. Trade deficit…

Q: Will an increase in attractiveness of the US as a tourist destination DECREASE or INCREASE the value…

A: Will an increase in attractiveness of the US as a tourist destination DECREASE or INCREASE the…

Q: If the Americans increase the quota on Japanese electronic devices, the dollar tends to...

A: Import quotas are intended to encourage people to buy domestic items, which can only be purchased…

Q: What will happen if the people expects that the value of a currency will increase? a. There will be…

A: Increase in the value of currency means the rate of exchange of the currency is less. For example:…