How Does an Increase in a Country's Exchange Rate Affect

Multiple Choice

How does an increase in a country's exchange rate affect its balance of trade?

A) An increase in the exchange rate raises imports, reduces exports, and reduces the balance of trade.
B) An increase in the exchange rate reduces imports, raises exports, and reduces the balance of trade.
C) An increase in the exchange rate reduces imports, raises exports, and increases the balance of trade.
D) An increase in the exchange rate raises imports, reduces exports, and increases the balance of trade.
E) A country's exchange rate has no affect on its balance of trade.