+3 votes
in Economics by kratos

Explain the effect of appreciation of domestic currency on imports.

1 Answer

+4 votes
by kratos
 
Best answer

Appreciation of domestic currency means a rise in the price of domestic currency (say, rupee) in terms of a foreign currency (say, $). Now, one rupee can be exchanged for more $, i.e., with the same amount of money, more goods can be purchased from the USA. It leads to increase in imports from the USA as **** goods will become relatively cheaper.

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