An appreciation of the U.S. dollar

Understanding the Impact of U.S. Dollar Appreciation

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Question

An appreciation of the U.S. dollar

Answers

A. is the same thing as an increase in the domestic price level.

B. increases the purchasing power of the U.S. dollar in foreign markets for goods and services.

C. decreases the purchasing power of the U.S. dollar in foreign markets for goods and services.

D. is the same thing as a decrease in the consumer price level.

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Explanations

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A. B. C. D.

An appreciation of the U.S. dollar implies that it takes less U.S. dollars to purchase one unit of foreign currency. Thus, a U.S. dollar goes further than it did before.

This is an increase in the purchasing power of the U.S. dollar.

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