Question

“A weak U.S. dollar leads to a higher volume of U.S. imports.” Is this statement TRUE or FALSE? Explain WHY.

Answer 1

This statement is False. A currency getting weak means that it's value as compared to other currencies is less. It also means that now less number of other currencies would be required to get that particular currency. Now, if the dollar ets weak then the countries goods and services will be comparitively cheaper as before. Thus, other countries would like to purchase such goods and services at a cheaper price than before. Also, importing any good or service would cost more than before. This implies that a weak U.S. dollar leads to lesses volume of U.S. imports and higher volume of exports.