Concerning the exchange rate index of the U.S.dollar, suppose that the dollar's real exchange rate index falls from 125 to 110.This means that
A) U.S. goods are less competitive on foreign markets.
B) U.S. goods are more competitive on foreign markets.
C) the dollar has appreciated against the currencies of its major trading partners.
D) U.S. price levels are identical to its trading partners.

Question

Quizplus · Accepted Answer

When the dollar's real exchange rate index falls, it means that the dollar has depreciated relative to the currencies of its major trading partners, making U.S. goods cheaper and more competitive on foreign markets.

Concerning the Exchange Rate Index of the U