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Why Does the Depreciation of a Country's Currency Tend to Increase

Question 13

Multiple Choice

Why does the depreciation of a country's currency tend to increase its price level?


A) domestic buyers tend to substitute imports for domestic products
B) a currency depreciation makes a country's products less competitive in world markets, so exports fall
C) a currency depreciation makes imported inputs more expensive
D) a currency depreciation makes imported inputs less expensive

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