When the real exchange value of the U.S. dollar rises: multiple choice U.S. impo

Question

When the real exchange value of the U.S. dollar rises:

multiple choice

U.S. imports will decrease but exports will be unaffected.

U.S. exports will decrease and imports will increase.

U.S. exports will increase and imports will decrease.

U.S. exports will decrease but imports will be unaffected.

U.S. imports will decrease but exports will be unaffected.

U.S. exports will decrease and imports will increase.

U.S. exports will increase and imports will decrease.

U.S. exports will decrease but imports will be unaffected.

Explanation / Answer

U.S.exports will increase and imports will decrease. This increasse the Current Account Demand CAD = EXD IMD

Export rises since the price in terms of dollars decrease and price in terms of other currency rises which has led to an increase in the real exchange rate of dollar.

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