Suppose that you are a U.S.producer of a commodity good competing with foreign producers.Your inputs of production are priced in dollars and you sell your output in dollars.If the U.S.currency depreciates against the currencies of our trading partners,
A)your competitive position is likely improved.
B)your competitive position is likely worsened.
C)your competitive position is unchanged.
D)none of the options

Question

Quizplus · Accepted Answer

If the U.S. currency depreciates, it means that it takes more dollars to purchase goods in other currencies. This makes domestically produced goods relatively cheaper compared to foreign goods, which enhances the competitiveness of domestic producers. Therefore, A is the correct answer.

Suppose That You Are a U