Economics Question: How do changes in the exchange rate impact a country's exports and imports, and what factors can influence exchange rate fluctuations? A$)$ Exchange rates have no effect on a country's trade balance. B$)$ A weaker domestic currency can make exports more competitive and increase exports, while it may also lead to higher import costs. Factors like interest rates, inflation, and market sentiment can influence exchange rates. C$)$ Exchange rates have no impact on imports and exports, as they are solely determined by government trade policies. D$)$ A stronger domestic currency always leads to increased exports and reduced imports.

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