When the real exchange rate rises:

Social Studies

1 answer:

Mnenie [13.5K]3 years ago

6 0

Answer:

When the real exchange rate rises D) exports will decrease and imports will increase.

Explanation:

Exchange rate -

Exchange rate is defined as the number of unit of one of the currency exchangeable for the one unit of another .

The change in the exchange rates can alter the international price of the goods as -

Hence ,

If the value of dollar exchange rate rises , the relative price of the domestic goods will also rise while the relative price of the foreign goods and services will reduce .

Therefore ,

The change in relative prices will reduce U.S. exports and rises its imports.

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