Other things the same,if the U.S.price level rises,then
A)the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate rises.
B)the supply of dollars in the market for foreign-currency exchange increases,so the exchange rate falls.
C)the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate rises.
D)the supply of dollars in the market for foreign-currency exchange decreases,so the exchange rate falls.

Question

Quizplus · Accepted Answer

When the U.S. price level rises, the U.S. goods become more expensive relative to foreign goods. As a result, the demand for U.S. goods decreases, and the demand for foreign goods increases. This leads to a decrease in the supply of dollars in the market for foreign-currency exchange, which causes the exchange rate to rise.

Other Things the Same,if the U.S.price Level Rises,then