E.49: Impact of Currency Exchange Rates on Trade

What happens to the price of imported goods in the US when the domestic currency appreciates?

• Imported goods become cheaper

• Imported goods become more expensive

• The price of imported goods remains the same

• The price of domestic goods decreases

What is the effect of a stronger domestic currency on US exports?

• Exports become cheaper for foreign buyers

• Exports are banned

• Exports remain unaffected

• Exports become more expensive for foreign buyers

How does a depreciating domestic currency affect the cost of imported goods in the US?

• Reduces their quality

• Makes them more expensive

• Makes them cheaper

• Has no effect on their cost

What could be a potential impact on US companies that rely heavily on exports when the domestic currency strengthens?

• Decreased demand abroad

• Expansion of market share

• Increased sales and profitability

• Improved domestic sales

What does a stronger domestic currency imply for the purchasing power of consumers in the US regarding imported goods?

• Decreased purchasing power

• Reduced number of available products

• Increased purchasing power

• Unchanged purchasing power