Multiple Choice
Since the passage of NAFTA in 1993, which of the following economic events has occurred among the member nations?
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1. Introduction to Macroeconomics
Introduction to Economics
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When the US dollar becomes weaker, which of the following is true?
A
US imports become less expensive for American consumers.
B
US exports become more competitive in foreign markets.
C
The purchasing power of the US dollar increases internationally.
D
Foreign goods become cheaper for Americans.
Verified step by step guidance1
Step 1: Understand what it means for the US dollar to become weaker. A weaker dollar means that each dollar buys fewer units of foreign currency than before.
Step 2: Analyze the effect on imports. Since the dollar is weaker, American consumers need more dollars to buy the same amount of foreign goods, making imports more expensive, not less.
Step 3: Analyze the effect on exports. A weaker dollar makes US goods cheaper for foreign buyers because their currency now buys more dollars, so US exports become more competitive internationally.
Step 4: Consider the purchasing power of the US dollar internationally. Since the dollar is weaker, its purchasing power abroad decreases, not increases.
Step 5: Summarize the correct statement: US exports become more competitive in foreign markets when the dollar weakens, while imports become more expensive and foreign goods do not become cheaper for Americans.
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