What does a strong currency typically do to a country’s import levels?

A strong currency typically increases a country's import levels. When a currency is strong compared to others, it means that it has a higher purchasing power relative to foreign currencies. This increased purchasing power allows consumers and businesses within the stronger currency country to buy more goods and services from abroad, as imports become cheaper.

For example, if a country’s currency strengthens against the dollar, then imported goods priced in dollars would require less of the local currency to purchase. As a result, consumers may be more inclined to buy imported products, leading to an increase in import levels.

Moreover, businesses may also take advantage of the lower costs of foreign goods to incorporate them into their production processes, further stimulating the growth of imports. This dynamic directly correlates with the relationship between currency strength and import activity, illustrating why a strong currency generally leads to increased imports.