If the U.S. exchange rate increases relative to currencies in other countries, then
A) imports and exports of the United States will both increase.
B) imports and exports of the United States will both decrease.
C) imports of the United States will decrease and exports of the United States will increase.
D) imports of the United States will increase and exports of the United States will decrease.

Question

Quizplus · Accepted Answer

When the U.S. exchange rate increases, U.S. goods become more expensive for foreign buyers, leading to a decrease in exports. Conversely, foreign goods become cheaper for U.S. consumers, leading to an increase in imports.

If the US Exchange Rate Increases Relative to Currencies in Other Countries