An increase in the value of the dollar in international exchange rate markets will cause the relative price of U.S. produced goods to foreigners to rise, the relative price of foreign produced goods to Americans to fall, causing U.S. exports to fall and U.S. imports to rise.

Question

Quizplus · Accepted Answer

An increase in the value of the dollar makes U.S. produced goods relatively more expensive for foreigners, leading to a decrease in U.S. exports. At the same time, foreign-produced goods become relatively cheaper for Americans, leading to an increase in U.S. imports.

An Increase in the Value of the Dollar in International