ECON 215 - Exchange rates, currency appreciation/depreciation, and net exports

If the U.S. dollar strengthens (appreciates), what happens to U.S. exports?

Exports fall, because U.S. goods become more expensive for foreigners.

If the U.S. dollar weakens (depreciates), what happens to U.S. exports?

Exports rise, because U.S. goods become cheaper for foreigners.

True or False: A stronger dollar makes imports cheaper for U.S. consumers.

True — appreciation lowers the price of foreign goods in dollar terms.

True or False: A weaker dollar makes foreign goods cheaper in the U.S.

False — depreciation makes imports more expensive.

The relationship between exchange rates and net exports:

Dollar increases → Exports decreases, Imports increases. Dollar decreases → Exports increases, Imports decrease.