The Impact of Currency Appreciation & Depreciation on Trade Deficits Video

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When does a country have a trade deficit?

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1. If a country has a trade deficit and the local currency appreciates, _____.

2. In the event of an appreciation, what measures might a country take in order to reduce the effects on trade deficit?

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About This Quiz & Worksheet

What can be done to reduce the effects of currency appreciation on trade deficits? How might a country react to a substantial currency depreciation? You'll need to answer these types of questions when you use this quiz/worksheet assessment tool.

Quiz & Worksheet Goals

When you take this quiz, you will be required to:

  • Understand when a country has a trade deficit
  • Note what happens if a country has a trade deficit and the local currency appreciates
  • Describe the measures a country might take in response to a currency appreciation in regards to its effect on trade deficit
  • Determine what would happen to the trade deficit based on given information about a fictitious country's imports and trade deficit
  • Choose the best option for a government when a country suffers a major currency depreciation

Skills Practiced

  • Critical thinking - apply relevant concepts to examine information about currency and trade deficit in a different light
  • Interpreting information - verify that you can read information regarding when a country has a trade deficit and interpret it correctly
  • Information recall - access the knowledge you've gained regarding the effects of currency appreciation on trade deficit
  • Knowledge application - use your knowledge to acknowledge what a government would do as a result of a significant currency depreciation

Additional Learning

Further details about this economical topic are explored in the lesson titled The Impact of Currency Appreciation & Depreciation on Trade Deficits. You can use this lesson to learn more about:

  • What the trade deficits of specific countries were in 2017
  • Which countries had a trade surplus in 2017
  • What the exchange rate compares
  • How bigger, long-term currency variations affect trade
  • What is the focus of counteractions on the effects of currency appreciation
  • What the term 'J Curve' refers to
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