The assumption that the Fed would continue to increase interest rates caused the dollar to appreciate. For the U.S. economy, an appreciating dollar reflects
A)a rise in exchange rates, decreasing net exports and GDP.
B)a rise in exchange rates, increasing net exports and GDP.
C)a fall in exchange rates, decreasing net exports and GDP.
D)a fall in exchange rates, increasing net exports and GDP.

Question

Quizplus · Accepted Answer

An appreciating dollar means that the exchange rate is rising, making U.S. goods more expensive for foreign buyers, which decreases net exports and GDP.

The Assumption That the Fed Would Continue to Increase Interest