If the U.S.real exchange rate appreciates,U.S.net exports
A)increase and U.S.net capital outflow decreases.
B)decrease and U.S.net capital outflow increases.
C)and U.S.net capital outflow both increase.
D)and U.S.net capital outflow both decrease.

Question

Quizplus · Accepted Answer

When the U.S. real exchange rate appreciates, U.S. goods become more expensive relative to foreign goods, leading to a decrease in net exports. Simultaneously, the higher value of the dollar makes foreign investments more attractive, reducing U.S. net capital outflow.

If the U.S.real Exchange Rate Appreciates,U.S.net Exports