Money and Banking Help on imports and exports?
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Suppose country A sends most of its exports to country b. It gets most of its imports from country c. If A’s currency appreciates against B’s currency and depreciates against C’s, what happens to A’s imports, exports, and net exports?
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Answer:
Q1. A sends most of its exports to country B. If A’s currency appreciates against B’s currency. -Country A's exports to country B will suffer. Q2. It gets most of its imports from country C. If A’s currency depreciates against C’s, what happens to A’s imports from country C? -Its imports from country C will decline. Q3. Net effect will be decline in exports to Country B, and imports from country C. -Therefore, country A will have to realign its exports and imports to bring them in balance, otherwise its economy will suffer.
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