If the dollar appreciates relative to foreign currencies, we would expect
A)the multiplier to decrease.
B)a country's exports and imports to both fall.
C)a country's net exports to rise.
D)a country's net exports to fall.

Question

Quizplus · Accepted Answer

When the dollar appreciates, U.S. goods become more expensive for foreign buyers, leading to a decrease in exports, while foreign goods become cheaper for U.S. consumers, leading to an increase in imports. This results in a decrease in net exports.

If the Dollar Appreciates Relative to Foreign Currencies, We Would