A substantial appreciation of the U. S. dollar will likely result in, all else equal,

A. higher U. S. dollar prices of foreign products in the United States.

B. increased demand for U. S. products and increased employment of U. S. workers.

C. lower foreign currency prices of U. S. products in foreign countries.

D. lower demand for U. S. products and layoffs of U. S. workers.

Question

Business

Rayne Fischer

2 June, 18:55

A substantial appreciation of the U. S. dollar will likely result in, all else equal,

A. higher U. S. dollar prices of foreign products in the United States.

B. increased demand for U. S. products and increased employment of U. S. workers.

C. lower foreign currency prices of U. S. products in foreign countries.

D. lower demand for U. S. products and layoffs of U. S. workers.

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Answers (1)

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Newt · Answer 1

D. lower demand for U. S. products and layoffs of U. S. workers

Explanation:

"Currency appreciation is an increase in the value of one currency in relation to another currency. Currencies appreciate against each other for a variety of reasons, including government policy, interest rates, trade balances and business cycles.

[ ... ] If the U. S. dollar appreciates, foreigners will find American goods more expensive because they have to spend more for those goods in USD. That means that with the higher price, the number of U. S. goods being exported will likely drop. This eventually leads to a reduction in gross domestic product (GDP), which is definitely not a benefit."

Reference: Sharma, Rakesh. "Currency Appreciation Definition." Investopedia, Investopedia, 29 Aug. 2019