Question

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

a. Shipping costs
b. Domestic labor costs
c. Foreign imports
d. Domestic exports
e. Foreign labor costs

Answer 1

The correct answer is 'c. Foreign imports', as a depreciating U.S. dollar makes foreign goods more expensive to U.S. purchasers, leading to fewer imports and potentially more exports.

Step-by-step explanation:

When the U.S. dollar depreciates, it means that the value of the dollar has decreased relative to other currencies. This has various effects on the economy. For one, foreign imports become more expensive because more dollars are required to buy the same amount of foreign currency, which is then used to purchase goods from abroad. Therefore, the correct answer to which gets more expensive is 'c. Foreign imports'.

Consequently, U.S. consumers may choose to buy fewer imported goods, leading to a decrease in U.S. imports, which negatively affects foreign exporters. Meanwhile, U.S. exports are likely to increase, as foreign buyers find American goods to be cheaper when their currency is strong against the dollar.