An appreciation of the dollar on the foreign exchange market would result in all of the following, except:
A)a decrease in the dollar prices paid by U.S.importers.
B)an increase in the cost of vacations in Hawaii for Japanese tourists.
C)foreign holidays for U.S.residents to be less expensive.
D)an increase in the foreign currency prices paid for U.S.exports.
E)a decrease in the demand for U.S.exports.

Question

Quizplus · Accepted Answer

An appreciation of the dollar means that the dollar is worth more in relation to other currencies. This means that U.S. importers will pay less for goods from other countries, and foreign tourists will pay more for goods and services in the U.S. However, it also means that U.S. exports will be more expensive for foreign buyers, which will decrease the demand for U.S. exports.

An Appreciation of the Dollar on the Foreign Exchange Market