The euro falls in value against the US dollar. Which effect is most likely for the Netherlands?
Answer and explanation
Correct answer: A. Dutch exports become cheaper for buyers using dollars, which tends to raise exports and the price of imports
- Step 1: A weaker euro means one euro buys fewer dollars. Step 2. Dutch goods are then cheaper in dollar terms, and imports priced in dollars cost more euros. Answer: exports rise and imports become dearer. Why not the others: The other options reverse an effect.
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