NCEA Level 3 Ag & Hort Science Practice Questions - NCEA Level 3 Agricultural And Horticultural Science Examination Exam

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How does an appreciation (strengthening) of the New Zealand Dollar (NZD) relative to the US Dollar (USD) affect returns to NZ dairy exporters?

It increases the NZD payout received by domestic dairy farmers per kilogram of milk solids. It reduces the converted NZD value of USD-denominated export sales, lowering farm-gate returns. It makes New Zealand exports cheaper in foreign currencies, driving up total export volume. It has no impact on farm-gate returns because international trade is conducted solely in NZD.

Correct Answer:

It reduces the converted NZD value of USD-denominated export sales, lowering farm-gate returns.

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