Question

What's the likely result if the US dollar is valued lower than other nations' currencies?


A. Imports would be more expensive.
B. The United States would need to raise tariffs.
C. Nations would refuse to trade with the United States.
D. United States exports would be less attractive to foreign buyers.

Answer 1

Imports would be more expensive 

Answer 2

The correct answer is A.

If the dollars depreciates, its value lowers in relation with the value of foreign currencies. Domestic products become relatively cheaper for foreign consumers and hence, more attractive, while imports from abroad turn to be more expensive to US consumers as, after the depreciation, to purchase the same number of items, a larger amount of dollars will be needed.