Suppose that the United States and European Union are the only trading partners in the world. If the European Union imposes some import tariffs on U.S. goods, we would expect the:

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If the European Union imposes import tariffs on U.S. goods, this will make U.S. goods more expensive for European consumers, decreasing demand for U.S. goods and therefore decreasing demand for the dollar. This decrease in demand for the dollar will cause it to depreciate.

Suppose That the United States and European Union Are the Only