As the dollar depreciates relative to foreign currencies, foreign-produced goods will become expensive for Americans, while goods produced in America will become expensive for foreigners. As a result, U. S. exports will likely, while U. S. imports will likely

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Business

Gael Reilly

19 March, 03:59

As the dollar depreciates relative to foreign currencies, foreign-produced goods will become expensive for Americans, while goods produced in America will become expensive for foreigners. As a result, U. S. exports will likely, while U. S. imports will likely

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Answers (1)

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Barbara Oconnor · Answer 1

Exports will increase and imports will decline.

Explanation:

A depreciation in the value of a currency implies that its relative value as compared to other currencies has declined. A depreciation in the value of the dollar implies that the relative value of the dollar has declined.

This will make domestic goods cheaper for foreign consumers and foreign goods expensive for domestic consumers. The domestic consumers will need to pay more or the same as the dollar now values less.

This will cause US imports to decline and exports to increase. The domestic producer will consume more of the domestically produced goods.