When the dollar appreciates relative to foreign currencies,
A)a trade surplus results.
B)U.S. exports and imports become more expensive.
C)U.S. exports become more expensive and U.S. imports become cheaper.
D)the United States experiences a balance of payments deficit.

Question

Quizplus · Accepted Answer

When the dollar appreciates relative to foreign currencies, U.S. exports become more expensive, which may lead to a decrease in demand for U.S. goods, resulting in a trade deficit. On the other hand, U.S. imports become cheaper, which may lead to an increase in demand for foreign goods and result in a further trade deficit.

When the Dollar Appreciates Relative to Foreign Currencies