The United States implements a quota on imported cotton.This will ________ the supply of US dollars relative to the currencies of foreign cotton producers and lead to a(n)________ of US dollars relative to these foreign currencies.

Question

Quizplus · Accepted Answer

A quota on imported cotton reduces the supply of US dollars because fewer dollars are needed to purchase foreign cotton. This decrease in supply leads to an appreciation of the US dollar relative to foreign currencies.

The United States Implements a Quota on Imported Cotton