Asked by giannah alessandra on Jun 06, 2024
Verified
If the U.S.government were to impose a 20% tariff on all foreign imports,this would likely lead to ____ in demand for foreign currencies,causing the dollar to _____.
A) a decrease;depreciate
B) an increase;depreciate
C) a decrease;appreciate
D) an increase;appreciate
Foreign Imports
Goods or services brought into a country from abroad for sale.
Foreign Currencies
The currencies of other countries that are used in international transactions or are sought as investments.
- Examine the impact of interest rates and trade policies on the valuation of currencies and the balance of trade.
Verified Answer
TA
thumula abhinayJun 12, 2024
Final Answer :
C
Explanation :
A 20% tariff on all foreign imports would make foreign goods more expensive in the U.S., leading to a decrease in demand for these goods. Consequently, there would be less demand for foreign currencies to buy these goods, causing the value of the dollar to appreciate relative to foreign currencies.
Learning Objectives
- Examine the impact of interest rates and trade policies on the valuation of currencies and the balance of trade.
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