Holding all else equal, if the U.S. government imposes tariffs on imported products, then the equilibrium value of the U.S. dollar will:
A)appreciate.
B)depreciate.
C)remain fixed.
D)be determined by the Federal Reserve.

Question

Quizplus · Accepted Answer

U.S. imposed trade restrictions reduce the amount of foreign assets American can obtain, thereby reducing the supply of dollars in the foreign exchange market. This reduction in supply of dollars will make the U.S. dollar appreciate.

Holding All Else Equal, If the U