Question

When the U.S. dollar depreciates, ________ get more expensive.

a) Shipping costs

b) Domestic labor costs

c) Foreign labor costs

d) Foreign imports

e) Domestic exports

Answer 1

When the U.S. dollar depreciates, foreign imports become more costly for Americans, leading to decreased imports and negatively impacting foreign exporters.

Step-by-step explanation:

When the U.S. dollar depreciates, foreign imports get more expensive. This is because a depreciation of the U.S. dollar means that foreign currencies are relatively more expensive. As a result, items priced in foreign currencies cost more for U.S. purchasers, which often leads to a decrease in U.S. imports and can adversely affect foreign exporters. Conversely, U.S. products become cheaper to foreign consumers, which typically results in an increase in U.S. exports.

Exchange rates fluctuate and can substantially impact trade balances. With a depreciated U.S. dollar, foreign goods and services become more costly for Americans while making U.S. goods more affordable on the global market. Therefore, the correct answer to the question is: When the U.S. dollar depreciates, foreign imports get more expensive.