Discussion of Forex Trading and Currency Trading

If the dollar appreciates relative to foreign currencies, we would expect:?

a.the multiplier to decrease.
b. a country's exports and imports to both fall.
c. a country's net exports to rise.
d. a country's net exports to fall.

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2 Responses to “If the dollar appreciates relative to foreign currencies, we would expect:?”

  1. Jon B Says:
    May 2nd, 2008 at 8:53 am

    D

    The reason is that as the dollar appreciates versus other currencies, American exports are more expensive for foreigners to purchase. If the price is higher, they will buy fewer American exports.

  2. imirish11 Says:
    May 2nd, 2008 at 8:53 am

    If the dollar appreciates, US goods become relatively more expensive compared to the rest of the world. US exports would decrease (because our goods become more expensive) and US imports would increase (because our dollars have greater purchasing power). If the dollar appreciates relative to a foreign currency, foreign exports will increase while foreign imports decrease. So in the US net exports, or the current account balance, will decrease while abroad net exports will increase. The answer to the question depends on which country is referred to by "a country's"…

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