How does a weaker currency impact exports?

A weaker currency makes a country's goods cheaper for foreign buyers because they can purchase more of the local currency with their own currency. This price reduction can lead to increased demand for those exports since overseas buyers find them more financially attractive. As a result, exporters often see a boost in sales volumes when prices drop in the foreign market, enhancing their competitiveness against similar products offered by countries with stronger currencies.

The other choices do not reflect the typical economic relationship of currency strength and export activity. A weaker currency usually does not increase costs for export creation; instead, it can provide a cost advantage. The assumption that the effect is neutral disregards the established economic principle that a weaker currency generally boosts exports. Furthermore, a weaker currency does not typically encourage a move away from international markets; rather, it makes those markets more appealing due to the lower prices of exported goods.