The United States of America implements a quota on imported cotton. This will ________ the supply of United States dollars relative to the currencies of foreign cotton producers and lead to a(n)________ of United States dollars relative to these foreign currencies.

Question

Quizplus · Accepted Answer

Implementing a quota on imported cotton reduces the amount of cotton that can be imported into the United States. This means that U.S. importers will need to buy less foreign currency to pay for cotton, leading to a decrease in the supply of U.S. dollars on the foreign exchange market. With fewer U.S. dollars available, its value appreciates relative to the currencies of foreign cotton producers.

The United States of America Implements a Quota on Imported