Depreciation of the dollar relative to foreign currencies will tend to increase net exports and thus
aggregate demand of the U.S. economy.

Question

Quizplus · Accepted Answer

When the dollar depreciates relative to foreign currencies, foreign goods become more expensive for Americans while U.S. goods become cheaper for foreigners. This tends to increase exports and decrease imports, which leads to an increase in net exports and aggregate demand.

Depreciation of the Dollar Relative to Foreign Currencies Will Tend