Question

A Chinese international salesperson hoping to increase exports to the U.S. may worry about inflation of the U.S. dollar because the inflation may

increase the United States' supply of Chinese products
decrease tariffs on Chinese products sold to the United States
increase taxes on the United States' products sold to China
reduce the United States' demand for Chinese products

Answer 1

A Chinese international salesperson hoping to increase exports to the U.S. may worry about inflation of the U.S. dollar because the inflation may increase the United States' supply of Chinese products. When inflation of the U.S. dollar occurs, people with U.S. dollars to invest will look for a higher interest rated investment opportunity. Interest rates always rise along with inflation. On occasion, the markets can be flooded with many foreign products when this happens; that is a concern to all foreign salespersons.

Answer 2

The right answer is reduce the United States' demand for Chinese products.

Inflation means that the purchasing power of the currency has decreased, and by the result, all the products have their prices increased. The US dollar inflation will cause the Chinese products to increase its price, and knowing that most of the time salaries do not follow the inflation adjust, the demand for Chinese products will reduce.