Economics · Macroeconomics & Foreign Exchange
Consider the following statements regarding national currency appreciation: Statement I: Currency appreciation makes imports relatively cheaper for domestic consumers but renders exports more expensive in the international market. Statement II: A continuously stronger domestic currency automatically guarantees a favorable and positive trade balance for a developing country. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I is incorrect, but Statement II is correct.
- 2Statement I is correct, but Statement II is incorrect.✓
- 3Both Statement I and Statement II are correct, but Statement II is not the correct explanation for Statement I.
- 4Both Statement I and Statement II are correct, and Statement II is the correct explanation for Statement I.
Correct answer
Statement I is correct, but Statement II is incorrect.
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