Final answer:
A decrease in U.S. interest rates typically leads to a depreciation of the dollar, which in turn can lead to an increase in net exports because U.S. goods become cheaper for foreign buyers. Option A is the correct answer.
Step-by-step explanation:
When considering the effect of a decrease in U.S. interest rates on the value of the dollar and net exports, we should examine the relationship between interest rates, exchange rates, and international capital flows.
A lower interest rate in the U.S. makes domestic assets less attractive, leading to a decrease in demand for dollars by foreign investors and an increase in the supply of dollars as Americans invest more in foreign bonds. This results in a depreciation of the U.S. dollar. A depreciated dollar makes U.S. goods cheaper for foreigners, thereby potentially increasing net exports.
In light of this, the correct answer to the student's query is: a. a depreciation of the dollar that leads to greater net exports. This is because lower interest rates tend to decrease the exchange rate of the dollar, making U.S. products more competitive abroad and therefore increasing the quantity of exports relative to imports.