If there is an increase in demand for U.S. goods, the U.S. dollar will _____. If there is increased inflation in the United States, the U.S. dollar will _____.
A) appreciate; appreciate
B) appreciate; depreciate
C) depreciate; depreciate
D) depreciate; appreciate

Question

Quizplus · Accepted Answer

If there is an increase in demand for U.S. goods, the demand for the U.S. dollar will increase, as more people will need to buy dollars to purchase U.S. goods. This increased demand for the dollar will cause it to appreciate in value.

If there is increased inflation in the United States, it will decrease the purchasing power of the dollar, causing it to depreciate in value. So, the U.S. dollar will depreciate in value in this case.

If There Is an Increase in Demand for U