Answer to Question #290636 in Macroeconomics for Fidem

Question

In an open economy, the depreciation of the rand against the dollar would result in what?

Answer 1

$Solution$

The relative price of local products and services increases when the rand depreciates against the dollar.(this means the exchange rate rises), while the comparable price of international goods and services decreases.

The shift in relative prices will result in higher exports and lower imports for commodity example from United States.