Traveling abroad to country A,you notice that most goods and services are substantially cheaper there than in the U.S.If prices in country A do not rise,then you can expect

Question

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If goods and services are substantially cheaper in country A than in the U.S., this means that the purchasing power of country A's currency is greater than the U.S. dollar. As a result, demand for country A's currency will increase, causing it to appreciate in value. This, in turn, will make imports from the U.S. more expensive in country A, bringing prices back towards equilibrium. No intervention by either country's central bank or changes in exchange rates are necessary for this adjustment to occur.

Traveling Abroad to Country A,you Notice That Most Goods and Services