Question 3 of 10 How do exchange rates affect a country's ability to trade with its neighbors?
A. By preventing the country from trading with a large number of
different partners
B. By setting limits on the amount of goods the country can legally
import and export
C. By encouraging the country to trade only with countries that have
developed economies
O D. By determining how much the country's currency is worth when
importing goods

O D. By determining how much the country's currency is worth when

importing goods

Explanation:

When importing goods, one has to convert their local currency to the currency of the country they are buying from. The price of imported goods is affected by the exchange rates between the currencies of the importer and exporter.

Converting to the importer's currency entails using the local currency to buy the foreign currency. Each currency is either strong or weaker in comparison to another. If a country's currency is weaker compared to others, its citizens will use more of their local currencies when importing. They might not be able to import as much as they wish because their currency is weak, which makes imports expensive.