Question

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.

Answer 1

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.