A stronger dollar leads to lower input prices for U.S. firms because
A) U.S. workers are willing to work for less pay because of the stronger dollar.
B) U.S. producers of intermediate goods lower prices in order to benefit from the stronger dollar.
C) both imports of raw materials and intermediate goods are lower in prices.
D) both exports of raw materials and intermediate goods are lower in prices.

Question

Quizplus · Accepted Answer

A stronger dollar means that foreign currencies can buy more dollars, so imports become cheaper for U.S. firms. This includes raw materials and intermediate goods, which are used as inputs in production. Hence, Option C is correct. Neither A nor B necessarily happen as a result of a stronger dollar. Option D is the opposite of C and therefore incorrect.

A Stronger Dollar Leads to Lower Input Prices for U