Figure 19.2

-Referring to Figure 19.2, the effect of an increase in U.S. prices is represented by a movement from point

Question

Figure 19.2
 
-Referring to Figure 19.2, the effect of an increase in U.S. prices is represented by a movement from point

Quizplus · Accepted Answer

An increase in U.S. prices would lead to a depreciation of the U.S. dollar, which is represented by a movement from point a to point d on a typical exchange rate diagram. This movement indicates that more foreign currency is needed to purchase a dollar, reflecting the dollar's decreased value due to higher inflation or prices in the U.S.

Figure 19.2 -Referring to Figure 19.2, the Effect of an Increase in of an Increase