As the price of foreign exchange decreases relative to the U.S.dollar,

Question

Quizplus · Accepted Answer

A decrease in the price of foreign exchange relative to the U.S. dollar means that each unit of foreign currency can buy more U.S. dollars. This makes foreign goods cheaper for Americans as they would require fewer dollars to purchase the same amount of foreign goods. Option A is incorrect as U.S. products would become more expensive for foreigners due to their currency being weaker. Option C is also incorrect as more foreign currency would be required to purchase a U.S. dollar, not the other way around. Option D is incorrect as a shift to the right in the demand curve for foreign exchange would cause an increase in the price of foreign exchange relative to the U.S. dollar. Option E is incorrect as a decrease in the price of foreign exchange would increase the supply of foreign exchange to U.S. markets due to the increased demand for U.S. dollars.

As the Price of Foreign Exchange Decreases Relative to the U.S.dollar