An exchange rate appreciation will lead to exports becoming    competitive and imports becoming   . Ceteris paribus, this would lead to a worsening of the    balance.

An exchange rate appreciation will lead to exports becoming less competitive and imports becoming more competitive. Ceteris paribus, this would lead to a worsening of the trade balance.

Here's why:

1. Exchange Rate Appreciation: This means that the value of the domestic currency has increased relative to foreign currencies. In other words, you can now buy more foreign currency with your domestic currency than before.

2. Impact on Exports: When your currency appreciates, your goods become more expensive for foreign buyers. This is because they now need more of their own currency to buy your currency and then use that to buy your goods. As a result, your exports become less competitive.

3. Impact on Imports: On the other hand, an appreciated currency makes foreign goods cheaper for you to buy. This is because you now need less of your currency to buy foreign currency, which you can then use to buy foreign goods. As a result, imports become more competitive.

4. Impact on Trade Balance: The trade balance is the difference between the value of a country's exports and the value of its imports. If exports decrease (due to them being less competitive) and imports increase (due to them being more competitive), then the trade balance will worsen. That is, the country will be importing more than it is exporting, leading to a trade deficit.