AP Macroeconomics Question 25: Answer and Explanation
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2. Depreciation of the dollar is most likely to
- A. increase imports
- B. increase travel abroad
- C. increase exports
- D. decrease a trade surplus
- E. increase a trade deficit
Correct Answer: C
C Depreciation of the dollar will make American goods cheaper to export, and will make imports more expensive for Americans. A direct consequence is that American companies will export more and demand for foreign goods in America will decrease. Therefore the answer is (C).