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Answer (C) is correct . If the growth of a country’s national income is more rapid than other countries’ national income, its currency is likely to depreciate. A country’s imports vary directly with its level of income. As income rises in Esland, Esland consumers purchase more domestic and foreign goods. The greater demand for foreign goods causes a demand for the foreign currency. When demand increases for the foreign currency, its price increases, and Esland’s currency depreciates as a result.

Answer (A) is incorrect because The $E will depreciate against the $W.
Answer (B) is incorrect because The rise in imports will cause $E to depreciate.
Answer (D) is incorrect because Imports and exports have a substantial effect on currency exchange rates.