Other things being equal, an increase in the U.S. rate of inﬂation is likely to cause an increase in the
A) quantity of U.S. exports.
B) quantity of U.S. imports.
C) demand for U.S. dollars.
D) international value of the U.S. dollar.

Question

Quizplus · Accepted Answer

An increase in the U.S. rate of inflation typically makes U.S. goods more expensive relative to foreign goods. This tends to reduce the demand for U.S. exports while making imports more attractive to U.S. consumers, thereby increasing the quantity of U.S. imports.

Other Things Being Equal, an Increase in the U