Final answer:
It requires more dollars to buy foreign currency when the dollar is weaker, which lowers the foreign price of U.S.-made goods and benefits U.S. exporters selling abroad.
Step-by-step explanation:
In answering the student's question regarding currency values and economic advantages, it's important to understand currency strength and its implications.
Answers to the Student's Questions
- More dollars, since 'weaker' means that the U.S. dollar falls in value relative to other currencies (Option D).
- A weaker dollar lowers the foreign currency prices of U.S.-made goods in other countries, providing a competitive advantage as it makes exports more affordable and attractive internationally (Option B).
- U.S. exporters would gain from this competitive advantage over countries that import large quantities of U.S. goods because a weaker dollar makes U.S. goods less expensive for foreign buyers (Option D).
For a U.S. firm selling abroad, a weaker U.S. dollar makes its goods cheaper in the foreign market, potentially increasing its exports. Conversely, a stronger dollar would be beneficial for foreign firms selling in the U.S. because it results in higher profits when converting dollars into their home currency.