Which of the following could result from a balance-of-trade deficit?
A)The value of the dollar increases,so Americans can buy more goods from other countries for the same amount of money.
B)The value of the dollar declines,so Americans have to pay more for goods from other nations.
C)The value of the dollar increases,making American products cheaper abroad,thereby increasing our exports.
D)The value of the dollar declines,which makes American products more expensive abroad,thereby decreasing our exports.

Question

Quizplus · Accepted Answer

A balance-of-trade deficit can lead to a decline in the value of a country's currency, making imports more expensive and exports cheaper in foreign markets. This is because a trade deficit means the country is importing more than it is exporting, increasing demand for foreign currencies and decreasing demand for its own currency.

Which of the Following Could Result from a Balance-Of-Trade Deficit