If the dollar appreciates and foreign goods become less expensive, the total planned expenditures on domestic goods and services will
A) fall due to the open economy effect.
B) fall due to the interest rate effect.
C) increase due to the open economy effect.
D) increase due to the interest rate effect.

Question

Quizplus · Accepted Answer

When the dollar appreciates, foreign goods become less expensive compared to domestic goods, which leads to an increase in imports and a decrease in exports. This causes a decrease in the total planned expenditures on domestic goods and services due to the open economy effect.

If the Dollar Appreciates and Foreign Goods Become Less Expensive