Question

Assume a nation's external wealth is positive. Also assume all external liabilities and assets are denominated...

Assume a nation's external wealth is positive. Also assume all external liabilities and assets are denominated in US dollars (foreign currency). How will its wealth change when its currency appreciates against the US dollars?

Select one:

a. Its external wealth will rise.

b. There will be no change in the value of its wealth.

c. Its external wealth will fall.

d. It depends on the depreciation rate for the effective exchange rate of the US dollars.

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Answer #1

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