When the domestic money prices of goods are held constant

Question

Quizplus · Accepted Answer

When the domestic money prices of goods are held constant, a nominal dollar depreciation makes U.S. goods cheaper compared with foreign goods because it takes more of the foreign currency to buy the same amount of dollars, making U.S. goods more affordable for foreign buyers. Conversely, a nominal dollar appreciation makes U.S. goods more expensive compared with foreign goods because it takes less of the foreign currency to buy the same amount of dollars, making U.S. goods less affordable for foreign buyers.

When the Domestic Money Prices of Goods Are Held Constant