Questions: A currency appreciation does which of the following? Makes the domestic country's export levels increase Makes products exported from the domestic country more expensive for foreigners Makes imported goods more costly for domestic consumers Makes products exported from the domestic country less expensive for foreigners

The answer is the second one: Makes products exported from the domestic country more expensive for foreigners.

Explanation for each option:

1. Makes the domestic country's export levels increase: This is incorrect. When a country's currency appreciates, its goods become more expensive for foreign buyers, which typically leads to a decrease in export levels, not an increase.

2. Makes products exported from the domestic country more expensive for foreigners: This is correct. Currency appreciation means that the domestic currency is stronger compared to foreign currencies. As a result, foreign buyers need to spend more of their own currency to purchase the same amount of goods from the appreciating country, making exports more expensive.

3. Makes imported goods more costly for domestic consumers: This is incorrect. Currency appreciation actually makes imported goods cheaper for domestic consumers because their stronger currency can buy more foreign goods for the same amount of money.

4. Makes products exported from the domestic country less expensive for foreigners: This is incorrect. As explained, currency appreciation makes exports more expensive for foreigners, not less.

In summary, when a currency appreciates, it makes the country's exports more expensive for foreign buyers, potentially reducing export levels.