The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.

Name: The purchase of U.S. goods by foreigners generates a demand for U.S. dollars in the foreign currency market.
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Question

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When foreigners purchase U.S. goods, they have to pay in U.S. dollars, which increases the demand for U.S. dollars in the foreign currency market. This can lead to an appreciation of the U.S. dollar relative to other currencies.

The Purchase of U