If the U.S.has a trade deficit and the nominal exchange rate depreciates,then other things the same
A)the trade deficit rises and net capital outflow rises.
B)the trade deficit rises and net capital outflow falls.
C)the trade deficit falls and net capital outflows rise.
D)the trade deficit falls and net capital outflows fall.

Question

Quizplus · Accepted Answer

A depreciation of the nominal exchange rate makes U.S. goods cheaper for foreigners and foreign goods more expensive for U.S. residents, which tends to reduce the trade deficit and increase net capital outflows.

If the USHas a Trade Deficit and the Nominal Exchange Rate Depreciates,then