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Dear F9 tutor,
Kindly ask You, to explain with numerical examples this relationship. I have tried to remeber it, but I think I will be confused during exam, if I do not understand the logic.A lower exchange rate A higher exchange rate
-Domestic goods are cheaper in – Domestic goods are more expensive in
foreign markets so demand for foreign markets so demand for exports falls.
exports increases. -Foreign goods are cheaper so demand for
-Foreign goods are more expensive so imports rises.
demand for imports falls.Thank you in advance.
Best regards. Lilit.I don’t see how I can give you numerical examples (and you would not be asked for any).
I would not spend too much time on it – there is unlikely to be much (if anything) on this in the exam.
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