Question

When the U.S. dollar is weak, a. U.S. manufacturers are more likely to close plants abroad. b. U.S. manufacturers tend to make more purchases from foreign sources. c. U.S. manufacturers tend to reduce purchases from foreign sources. d. U.S. manufacturers are likely to switch to service production.

Answer 1

C) U.S. manufacturers tend to reduce purchases from foreign sources.

Step-by-step explanation:

When the US currency is weak, foreign products are more expensive, since you need more US dollars to buy the same amount of products as before.

The laws of supply and demand works for all products, domestic and imported. As the price of imported products increases, their domestic demand will decrease.

The combination of lower demand and more expensive products will always equal lower imports.

When the US dollar is strong, the opposite happens.

Answer 2

The answer is C. U.S. manufacturers tend to reduce purchases from foreign sources.

Explanation: When the U.S. dollar is strong in relation to another foreign currency, this will translate to having a higher purchasing power when making purchases in the country with the weaker currency. This means that more products can be bought if the dollar is used in the country with the weaker currency.

Conversely however, when the dollar is weak, compared to a foreign currency, this will translate to a lower purchasing power, and this means that the dollar will not be able to make so many purchases.

Therefore U.S. manufacturers will tend to reduce purchases from foreign sources, because of the low purchasing power of the weak dollar.