ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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U.S. exports will increase to that country
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U.S. government will increase the tariff on goods from that country
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U.S. trade deficit will become larger to that country
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U.S. tourists will visit that country in greater numbers
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Detailed explanation-1: -If the dollar depreciates (the exchange rate falls), the relative price of domestic goods and services falls while the relative price of foreign goods and services increases. 1. The change in relative prices will increase U.S. exports and decrease its imports.
Detailed explanation-2: -If a currency appreciates it is more valuable; if a currency depreciates it is less valuable. When an exchange rate changes, the value of one currency will go up while the value of the other currency will go down.
Detailed explanation-3: -When the value of the U.S. dollar rises in relation to other currencies, exported products become more expensive in those foreign markets and are less competitive. On the other hand, imported products become less expensive in U.S. markets and are more competitive.
Detailed explanation-4: -If the value of the US dollar declines in relation to other currencies, goods imported into the United States will: not be allowed to enter the country.