When the U.S. dollar depreciates, this makes foreign goods more expensive. As a result:
A)competitive pressure on U.S. businesses is increased, leading U.S. businesses to lower prices.
B)competitive pressure on U.S. businesses is released, leading some U.S. businesses to raise prices.
C)cost of inputs decrease for U.S. firms that use foreign-made inputs.
D)foreign buyers are now willing to pay less for American-made goods.

Question

Quizplus · Accepted Answer

When the U.S. dollar depreciates, foreign goods become more expensive in dollar terms, reducing the competitive pressure from foreign products. This can allow U.S. businesses to raise prices since their goods become relatively cheaper or more competitive compared to foreign goods.