Question

1) ————-benefit from their domestic currency depreciating in value.

A) importers

B) exporters

2) a change from $1= €1.45 to $1= €1.52 represents the dollar ————

A) appreciating

B) depreciating

3) if a nation has relatively high inflation, you would expect their currency to ———-

A) appreciate

B) depreciate

Answer 1

1.

Nominal Exchange rate is ratio of value of currency of two countries. Therefore when nominal exchange rate increases, the domestic currency depreciates and foreign currency appreciates. Hence domestic goods become cheaper compare to foreign goods. Hence domestic currency buys fewer units of foreign currency and the domestic currency has depreciated.

Since when domestic currency depreciates, the value of goods and services of domestic country decreases, so foreign demand more domestic goods and services and therefore export of the domestic country will increase. Hence exporters of the domestic country benefit from the depreciation of the domestic currency.

B; exporters.

2.

2) a change from $1= €1.45 to $1= €1.52 represents the dollar ————

Since now according to the new exchange rate $1 dollar can purchase more of € .

Hence dollar appreciates and € depreciates.

Hence it can be said that

change from $1= €1.45 to $1= €1.52 represents the dollar appreciating.

Correct answer.

A) appreciating

3)

Since if there is high inflation in the domestic country, the foreigner demand less of domestic goods and services, so the less demand for domestic currency. This leads to depreciation of domestic currency.

Hence it can be said that if a nation has relatively high inflation, you would expect their currency to depreciate.

Hence option B is the correct answer.

B depreciate.