If the U.S. dollar appreciates in the foreign-exchange market, net exports will:
A) increase.
B) decrease.
C) be unaffected.
D) It is impossible to say how net exports will be affected without knowing how net capital outflow is affected.

Question

Quizplus · Accepted Answer

An appreciation of the U.S. dollar would make U.S. goods relatively more expensive for foreigners to buy, thereby decreasing exports and increasing imports, leading to a decrease in net exports.

If the US Dollar Appreciates in the Foreign-Exchange Market, Net Exports Will