If the U.S.dollar appreciates in the foreign exchange market,U.S.exports will be __________ and U.S.imports will be __________.

Question

Quizplus · Accepted Answer

When the U.S. dollar appreciates, it becomes relatively more expensive compared to foreign currencies. This makes U.S. exports relatively more expensive for foreign buyers and thus reduces demand for U.S. exports. At the same time, imports become relatively less expensive for U.S. consumers and this increases demand for foreign goods. Therefore, U.S. exports will be relatively less competitive and U.S. imports will be relatively more attractive, leading to an increase in imports and a decrease in exports.

If the USDollar Appreciates in the Foreign Exchange Market,U