What happens when Sweden’s currency loses value compared to Norway’s currency?

Multiple choice question for Foreign Exchange. Select an option, then review the explanation below.

Show Answers

Norwegian exports become costlier for people living in NorwayNorwegian export products become less expensive for Swedish consumersSwedish exports become more affordable for Norwegian buyersSwedish export items become cheaper for Swedish residents

Explanation

When Sweden’s currency depreciates relative to Norway’s, Norwegian exports do not become cheaper for Norwegians themselves; rather, the cost of Norwegian goods within Norway remains the same or may increase due to inflation. The correct effect is that Norwegian exports become more expensive for those in Norway.

Practice related questions from the same subject.

1.In a floating exchange rate system, what is the typical trend observed regarding currency values?
2.What term describes the increase in the value of one currency compared to another?
3.What is the typical impact of a fiscal expansion in the UK on the value of the pound sterling?
4.What do we call exchange rates that fluctuate based solely on market supply and demand without government intervention?
5.What type of exchange rate system was established by the agreements made at the 1944 Bretton Woods conference?

What happens when Sweden’s currency loses value compared to Norway’s currency?

Explanation

More Foreign Exchange MCQs