Asked by Sayuri Yamane on Apr 30, 2024
Verified
If the rate of inflation in the U.S.falls relative to the rate of inflation in foreign nations,U.S.exports _______ and imports ______.
A) increase;decrease
B) decrease;increase
C) decrease;decrease
D) increase;increase
Rate of Inflation
The percentage increase in the price level of goods and services in an economy over a period of time, typically calculated annually.
U.S. Exports
Goods and services produced in the United States and sold to other countries, contributing to the country's GDP.
- Identify the effect of inflation rates on the value of a nation's currency in international exchange markets.
Verified Answer
HM
Howard MokoloApr 30, 2024
Final Answer :
A
Explanation :
When inflation in the United States falls relative to inflation in foreign countries, the value of the dollar falls. This makes US exports cheaper for foreign buyers, leading to an increase in exports. At the same time, imports become more expensive for US consumers, leading to a decrease in imports. Therefore, the correct answer is A) increase; decrease.
Learning Objectives
- Identify the effect of inflation rates on the value of a nation's currency in international exchange markets.