SIE Exam Question 399: Answer and Explanation

Question: 399

When the US dollar weakens,

• A. imports from foreign countries tend to increase
• B. exports to foreign countries tend to increase
• C. the FRB will engage in QE policy
• D. US trade deficit will tend to rise

Correct Answer: B

Explanation:

B: A 'weak' US dollar makes US goods 'cheaper' for foreign buyers to buy, since their currency becomes 'stronger.' This leads to an increase in the export of US manufactured goods.