Question

Lower tariffs and quotas cause a country's currency to ________ in the ________ run, everything else held constant. Question 25 options: A) appreciate; short B) depreciate; short C) depreciate; long D) appreciate; long

Answer 1

Option C Depreciate; long

Step-by-step explanation:

The reason is that the imports of the items starts increasing and as a result the supply of the currency starts increasing which means the demand of the foreign currency increases and as a result the domestic currency weakens in the longer term.