If the exchange rate appreciates, what is likely to happen to exports and the current account in the short term?

If the exchange rate appreciates, what is likely to happen to exports and the current account in the short term?

• A. Exports become cheaper for foreign buyers, increasing exports.
• B. Exports become more expensive for foreign buyers, reducing export demand and potentially worsening the current account.
• C. There is no effect on trade.
• D. Both exports and imports rise equally.

Answer: (B)