Answered

Title: Econ-U7-7.02-Std12-9

What does it mean to have an appreciated currency in the foreign exchange market?

A. The currency is weak.
B. The currency can buy a lot of foreign products (imports).
C. It causes capital flight.
D. Price level and real GDP output increase.



Answer :

GinnyAnswer

Final answer:

Currency appreciation occurs when a currency's value increases, impacting imports and exports differently.


Explanation:

Currency appreciation in the foreign exchange market refers to when a currency's value increases compared to other currencies. This makes foreign goods cheaper, stimulating imports, but can hurt exports as domestic goods become relatively more expensive to foreigners. A stronger currency may lead to a rising trade deficit if not managed properly.


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