Question

Now, put it all together. Explain how a rise in currency value would affect a country’s ability to import and export goods. Give your answer in at least two to three complete sentences.

Answer 1

Answer:

If a country experiences a rise in value, it will trade at a higher exchange rate. This rise in value will cause the prices of exports to increase, so other countries may be less willing to buy these goods. At the same time, the rise in value will make it easier and cheaper to import goods.

Answer 2

Let us take any other country say India for example to understand this scenario.Say $1= Rs 60 ,then if India imports stuffs from USA,India will pay less,Rs 60 for $1. Say later on its $1=Rs 70,India will have to pay more money for the same import as Rs 60 is not enough now to be equal to dollar,India will have to pay Rs 10 more,so India will reduce imports from USA and will try to  import from some country where the same product is cheaper,say China where China gives huge subsidy up to 50% on each product being exported.