Question

1. If the Turkish Lira appreciates against the euro, then

A) Europeans should find Turkish goods now less expensive.

B) Turkish consumers would find Turkish goods relatively less expensive than European goods.

C) European goods should have an easier time competing against Turkish goods in both countries.

D) Turkish goods should have an easier time competing against European goods in both countries.

Find the true one please

Answer 1

If Turkish lira appreciate against the euro then it means for 1 Euro you will get less Turkish lira than before

with this the Turkish goods for Europeans will become expensive and European goods for Turkey people will become cheap.

As a result of which the Turkish exports to Europe will reduce and imports from Europe will increase.

Option (a) is wrong because Europeans find Turkish goods more expensive.

Option (d) is wrong because Turkish goods become expensive as a result of which they will have a difficult time in competing against the local goods in Europe.

Option (b) is wrong because Turkish customers find European goods less expensive because they will get to more Euros now with which they can purchase more.

Option (c) is correct because the European goods will become less expensive in Turkey so that it will be the competition in Turkey as a result of which will have easy time in competing in both the countries