What effect did the decrease in the value of the dollar have on the U.S.trade deficit in the period from 2006 to 2009?
A)It decreased the trade deficit as Americans bought more U.S.capital goods.
B)It decreased the trade deficit as foreigners were attracted to the increased value of U.S.products and Americans bought fewer imports.
C)It increased the trade deficit as U.S.investors bought more domestic financial assets.
D)It increased the trade deficit as Americans bought more imports and foreigners bought fewer U.S.products.

Question

Quizplus · Accepted Answer

When the value of the dollar decreases, U.S. products become cheaper for foreigners, leading to an increase in exports. Simultaneously, foreign products become more expensive for Americans, resulting in a decrease in imports. This combination can lead to a decrease in the trade deficit.

What Effect Did the Decrease in the Value of the Dollar