Question

A strong U.S$ is normally expected to cause;

a) high unemployment and high inflation in the U.S

b) high unemployment and low inflation in the U.S

c) low unemployment and low inflation in the U.S

d) low unemployment and high inflation in the U.S

Answer 1

Solution:

A strong U.S$ is normally expected to cause;

b) High unemployment and low inflation in the U.S (Correct Answer)

Explanation: A strong US dollar leads to make U.S. goods more expensive in foreign markets and also makes it more difficult for U.S. producers to compete with cheap imported products. Dollar strength makes U.S. exports more expensive for foreigners. As a result, factories and manufacturing workers losing their jobs and make the unemployment rate high and the high unemployment rate leads to low inflation.

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