An increase in the exchange rate of the U.S.dollar relative to a trading partner can result from
A) higher anticipated costs of production in the U.S.
B) higher interest rates and higher inflation in the U.S.
C) higher growth rates in the trading partner's economy
D) a change in the terms of trade
E) lower export industry productivity

Question

Quizplus · Accepted Answer

Higher growth rates in the trading partner's economy can increase demand for the U.S. dollar, as the trading partner may need more dollars to purchase U.S. goods and services, leading to an appreciation of the U.S. dollar.

An Increase in the Exchange Rate of the U