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When the United States dollar depreciates, which of the following is a likely effect?

A. United States exports increase.
B. United States imports increase
C. Japanese stop investing in American businesses
D. Travel abroad becomes more affordable.

1 Answer

3 votes

Answer:

If the dollar depreciates (the exchange rate falls), the relative price of domestic goods and services falls while the relative price of foreign goods and services increases.

Step-by-step explanation:

The change in relative prices will increase U.S. exports and decrease its imports.

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