Appreciation of the real exchange rate:
A) makes U.S. exports more expensive to foreigners.
B) makes U.S. exports less expensive to foreigners.
C) means a basket of U.S. goods would exchange for fewer foreign goods.
D) benefits all U.S. producers.

Question

Quizplus · Accepted Answer

Appreciation of the real exchange rate means that the value of the domestic currency has increased relative to foreign currencies. This makes exports more expensive for foreigners since they now have to pay more of their currency to buy a certain amount of U.S. goods.

Appreciation of the Real Exchange Rate