16/04/2025
The Ethiopian current book and test issuers are either intellectuals trying to fail students, or incompetent individuals and/or groups who collect content from various sources and publish books or questions. Please look at the following questions which is a part of the Oromia model for the month of April in this economics subject. If you were, which would you say is the correct answer? According to them, the answer is option D. But, option ''A'' is preferable to option ''D'' . The explanation is as follows;
The question asks about the impact on Kenyan exports to Sudan if the value of the Kenyan shilling decreases relative to the Sudanese pound.
Here's the breakdown:
* Weakening Kenyan Shilling: When the Kenyan shilling gets weaker (its value decreases), it means that one Sudanese pound can now buy more Kenyan shillings than before.
* Impact on Kenyan Goods in Sudan: For Sudanese buyers, Kenyan goods will now appear cheaper because their Sudanese pounds can purchase a larger quantity of Kenyan shillings, and therefore more Kenyan goods.
* Impact on Kenyan Exports: Since Kenyan goods become cheaper for Sudanese buyers, the demand for Kenyan exports to Sudan is likely to increase. This increased demand will lead to an increase in the volume of Kenyan exports.
* Impact on Kenya's Export Earnings: With a higher volume of exports (even if the price in Sudanese pounds per unit decreases slightly due to the shilling's depreciation), Kenya's total earnings from exports to Sudan are likely to increase.
Therefore, the correct answer is:
A. It will make the price of Kenyan goods in Sudanese market cheaper.
Let's look at why the other options are incorrect:
* B. It will make the price of Sudanese Import in the Kenyan market expensive. This describes the impact on Sudanese imports into Kenya, not Kenyan exports to Sudan.
* C. It will decrease Kenya's export earnings. This is incorrect because the increased volume of exports due to lower prices for Sudanese buyers is likely to increase export earnings.
* D. It will increase Kenya's export earnings. While this is a likely outcome, option A is a more direct and immediate impact of the shilling's depreciation. The increase in export earnings is a consequence of the cheaper prices in the Sudanese market. However, if we have to choose the most direct impact on Kenyan exports to Sudan, option A is the most accurate. If we consider the overall impact on Kenya due to these exports, option D would also be a valid consequence. Given the choices, option A describes the initial and most direct impact.
Final Answer: The final answer is {A}
