As a result of the 2008-2009 financial crisis and the decrease in GDP in many European economies, we would expect
A) an increase in the demand for U.S. exports and a leftward shift in the demand curve for dollars.
B) a decrease in the demand for U.S. exports and a leftward shift in the demand curve for dollars.
C) a decrease in the demand for U.S. exports and a rightward shift in the demand curve for dollars.
D) a decrease in the demand for U.S. imports and a movement up along the demand curve for dollars.

Question

Quizplus · Accepted Answer

A decrease in GDP in many European economies would likely lead to a decrease in the demand for U.S. exports, as European consumers and businesses would have less income to spend on foreign goods, including those from the U.S. This decrease in demand for U.S. exports would lead to a decrease in the demand for dollars, as fewer euros and other currencies would need to be exchanged into dollars to buy American goods, hence a leftward shift in the demand curve for dollars.

As a Result of the 2008-2009 Financial Crisis and the Decrease