An appreciation of the U.S. dollar will likely cause U.S. net exports to _______ and U.S. real GDP to _______.

Question

Quizplus · Accepted Answer

An appreciation of the U.S. dollar makes U.S. goods more expensive for foreign buyers and foreign goods cheaper for U.S. buyers. Consequently, U.S. net exports (exports minus imports) will decrease, as foreign demand for U.S. goods will fall while domestic demand for cheaper foreign goods will rise. A decrease in net exports will reduce aggregate demand for U.S. goods and services, leading to a decrease in U.S. real GDP.

An Appreciation of the U