Suppose the value of the U.S. dollar decreases from $1.20 Canadian to $1.10 Canadian. U.S. exports will _ _, U.S. imports will , and U.S. aggregate demand will .
A) increase; increase; increase
B) decrease; increase; decrease
C) decrease; increase; increase
D) increase; decrease; increase

Question

Quizplus · Accepted Answer

When the U.S. dollar depreciates, U.S. exports become cheaper for foreign buyers, leading to an increase in exports. Conversely, imports become more expensive for U.S. consumers, leading to a decrease in imports. As a result, U.S. aggregate demand increases due to the net export effect.

Suppose the Value of the U