The relationship between changes in foreign prices of U.S. goods relative to foreign price of foreign goods and the demand for dollars is
A)positive.
B)inverse.
C)horizontal.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

When the foreign prices of U.S. goods increase relative to foreign prices of foreign goods, demand for U.S. goods decreases. This leads to a decrease in the demand for dollars, as there is less need for foreign currency to purchase U.S. goods. Therefore, the relationship is inverse.

The Relationship Between Changes in Foreign Prices of U