If international speculators lose confidence in foreign economies and want to move some of their wealth into the U.S.economy,then in the short run there is
A) an increase in the value of the U.S.dollar in foreign exchange markets,a lower level of U.S.output and a lower U.S.price level.
B) an increase in the value of the U.S.dollar in foreign exchange markets,a higher level of U.S.output and a higher U.S.price level.
C) a decrease in the value of the U.S.dollar in foreign exchange markets,a lower level of U.S.output and a lower U.S.price level.
D) a decrease in the value of the U.S.dollar in foreign exchange markets,a lower level of U.S.output and a higher U.S.price level.

Question

Quizplus · Accepted Answer

When international speculators move their wealth into the U.S. economy, demand for the U.S. dollar increases, leading to an appreciation of the dollar. This makes U.S. exports more expensive and imports cheaper, reducing net exports, which can lower U.S. output and price levels in the short run.

If International Speculators Lose Confidence in Foreign Economies and Want