If the United States imports more than it exports, then
A)the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus.
B)one can infer that the U.S. dollar would be under pressure to depreciate against other currencies.
C)a and b
D)None of the above

Question

Quizplus · Accepted Answer

When the United States imports more than it exports, it means there is an excess supply of dollars in the foreign markets. This excess supply of dollars can lead to a decrease in the demand for the U.S. dollar, which in turn can lead to a depreciation of the U.S. dollar relative to other currencies. Therefore, both options A and B are correct, and the answer is C.

If the United States Imports More Than It Exports, Then