Suppose the exchange rate is initially set at 120 yen per dollar and increases to 140 yen per dollar. In the U.S. economy this would be expected to
A) increase the U.S.trade deficit (or decrease the trade surplus) .
B) decrease the U.S.trade deficit (or increase the trade surplus) .
C) increase the U.S.trade deficit only if exports change by more than imports.
D) leave the U.S.trade deficit unchanged.
E) decrease the U.S.trade deficit only if exports change by more than imports.
Correct Answer:
Verified
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