Final answer:
When the dollar appreciates relative to foreign currencies, it implies that less of the U.S. dollar is required to buy the same amount of foreign currency, effectively increasing the purchasing power of the dollar abroad. This is best reflected in option C, which states the value of foreign currencies has decreased relative to the U.S. dollar.
Step-by-step explanation:
When the dollar appreciates relative to foreign currencies, it means that the value of foreign currencies has decreased relative to our dollar. Specifically, this appreciation indicates that we can now buy more of another currency with a given amount of dollars. Consequently, a stronger dollar tends to increase imports by making foreign goods cheaper and can reduce exports since U.S. goods become more expensive for foreign buyers. For example, a weakened dollar usually results in increased exports because it makes U.S. products more affordable abroad, while a stronger dollar does the opposite, making imports more attractive to U.S. consumers.
In other words, option C, 'The value of foreign currencies decreased relative to our dollar,' is the correct choice. This can be demonstrated with the following scenario: Assume the exchange rate between the U.S. dollar and a foreign currency shifts from 1:1 to 1:2 due to dollar appreciation. Now, with one U.S. dollar, you can purchase more of the foreign currency, indicating that the dollar has strengthened relative to that currency.