Question

In: Finance

When a home currency depreciates, which one of the following is NOT correct? Select one: a....

When a home currency depreciates, which one of the following is NOT correct?

Select one:

a. home exporters have more advantages than home importers

b. home importers have more advantages since it takes more home currency to buy the foreign currency

c. a foreign currency is more valuable than the home currency

d. the home currency has less purchasing power in the world trade markets

Solutions

Expert Solution

When home currency depreciates, there would be more home currency for every unit of base currency exchanged. In such cases, the home exporters have more advantages than home importers as they now get more home currency. Also, the foreign currency becomes more valuable than home currency as a result of which the home currency loses purchasing power in the world trade markets. So the wrong statement is

b. home importers have more advantages since it takes more home currency to buy the foreign currency

jeff jeffy answered 2 years ago
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