U.S. exports increase and U.S. imports decrease the supplies of foreign monies owned by U.S. banks.

Question

Quizplus · Accepted Answer

When U.S. exports increase, foreign buyers pay for those exports with their own currency, which is then held by U.S. banks. Similarly, when U.S. imports decrease, U.S. buyers are paying for fewer goods with foreign currency, which means there are fewer foreign currencies held by U.S. banks. Therefore, both of these actions lead to a decrease in foreign monies owned by U.S. banks.

US Exports Increase and U