Question

What impact will the appreciation in the dollar have in the US imports and exports? Why?

Answer 1

An appreciation in the dollar involves an increase in the value of dollar.It means a currency is worth more in terms of foreign currency.

Impacts of Appreciation

Imports become cheaper and the US customers will find a greater quantity of imports.Therefore, with cheaper imports, we would expect to see an increase in the quantity of imports.

On the other hand, Exports will become more expensive because of the increase in prices of goods and the buyers are discouraged to buy more products. Therefore with a higher price, we would expect to see a fall in the quantity of UK exports.