Question

When the U.S. dollar depreciates against a foreign currency, what happens to U.S. goods and services?

1) They become more expensive for foreign buyers
2) They become cheaper for foreign buyers
3) They remain unaffected
4) Cannot be determined

Answer 1

When the U.S. dollar depreciates against a foreign currency, U.S. goods and services become cheaper for foreign buyers, leading to an increase in demand for U.S. exports.

Step-by-step explanation:

When the U.S. dollar depreciates against a foreign currency, U.S. goods and services become cheaper for foreign buyers. This means that foreign buyers can purchase more U.S. goods and services for the same amount of their own currency. As a result, there is an increase in demand for U.S. exports and a boost in the U.S. economy.