If the dollar depreciates relative to other currencies, which of the following is true?

Question

Quizplus · Accepted Answer

If the dollar depreciates, it takes more dollars to buy a foreign currency. This means that foreign goods and services become relatively more expensive for Americans, while American goods and services become relatively cheaper for foreign buyers. This can lead to a decrease in foreign purchases of U.S. goods. Choice A is incorrect because if it takes more foreign currency to buy a dollar, it means that the dollar has appreciated, not depreciated. Choice C is also incorrect because U.S. exports become relatively cheaper and more competitive in foreign markets, which can lead to an increase in exports, not a decrease.

If the Dollar Depreciates Relative to Other Currencies, Which of the Following