If the US Dollar Appreciates in the Foreign Exchange Market

question 21

Multiple Choice

If the U.S. dollar appreciates in the foreign exchange market,

• A) American goods will become more expensive for foreign buyers and foreign goods will be cheaper for Americans.
• B) American goods will become less expensive for foreign buyers and foreign goods will be more expensive for Americans.
• C) American goods will become more expensive for foreign buyers and foreign goods will be more expensive for Americans.
• D) American goods will become cheaper for foreign buyers and foreign goods will be cheaper for Americans.
• E) neither the price of U.S. exports nor the price of U.S. imports will change.

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Definitions:

Causal Attribution Theory

A concept in social psychology that examines how people determine the causes of behavior or events, attributing them to internal dispositions or external situations.

Partner Uncertainty

The inability to predict the behavior, thoughts, or feelings of another person.

Halo Effect

The tendency to extend an overall impression of a person, object, or institution based on one characteristic, either positive or negative.

Consistency Effect

The tendency for people to seek, interpret, and remember information that confirms their preexisting beliefs and attitudes.