The strong dollar in 2001
A) made U.S. exports more attractive relative to foreign goods, thereby increasing U.S. exports.
B) made U.S. exports more expensive relative to foreign goods, thereby reducing U.S. exports.
C) made U.S. imports more expensive, thereby reducing aggregate demand.
D) made U.S. imports more attractive, thereby increasing aggregate demand.

Question

Quizplus · Accepted Answer

When the dollar is strong, it means that it can buy more foreign currency. This makes U.S. exports more expensive relative to foreign goods, thereby reducing U.S. exports. Similarly, it makes U.S. imports less expensive, which could increase aggregate demand for foreign goods.

The Strong Dollar in 2001