Directions
As you read the following scenarios determine three things:
1. Will the US dollar appreciate or depreciate?
2. With the change in value, which will increase: US exports or US imports?
3. Will Net Exports increase or decrease?
1)Interest rates increase in the US compared to the rest of the world.
Will the US dollar appreciate or depreciate?
answer: appreciate
2) Interest rates increase in the US compared to the rest of the world.
With the change in value, which will increase: US exports or US imports?
answer: imports
3) Interest rates increase in the US compared to the rest of the world.
Will Net Exports increase or decrease?
answer: decrease
4) Interest rates decrease in the US compared to the rest of world.
Will the US dollar appreciate or depreciate?
answer: depreciate
5) Interest rates decrease in the US compared to the rest of world.
With the change in value, which will increase: US exports or US imports?
answer: exports
6) Interest rates decrease in the US compared to the rest of world.
Will Net Exports increase or decrease?
answer: increase
7) Income levels throughout the US increase relative to the rest of the world.
Will the US dollar appreciate or depreciate?
answer: depreciate
8) Income levels throughout the US increase relative to the rest of the world.
With the change in value, which will increase: US exports or US imports?
answer: exports
9) Income levels throughout the US increase relative to the rest of the world.
Will Net Exports increase or decrease?
answer: increase
10) Income levels throughout the rest of the world increase relative to the US.
Will the US dollar appreciate or depreciate?
answer: appreciate
11) Income levels throughout the rest of the world increase relative to the US.
With the change in value, which will increase: US exports or US imports?
answer: imports
12) Income levels throughout the rest of the world increase relative to the US.
Will Net Exports increase or decrease?
answer: increase
13) The general price level in the US rises relative to the price level in the rest of the world.
Will the US dollar appreciate or depreciate?
answer: depreciate
14) The general price level in the US rises relative to the price level in the rest of the world.
With the change in value, which will increase: US exports or US imports?
answer: exports
15) The general price level in the US rises relative to the price level in the rest of the world.
Will Net Exports increase or decrease?
answer: increase
16) The general price level in the rest of the world rises relative to the price level in the US.
Will the US dollar appreciate or depreciate?
answer: appreciate
17) The general price level in the rest of the world rises relative to the price level in the US.
With the change in value, which will increase: US exports or US imports?
answer: imports
18) The general price level in the rest of the world rises relative to the price level in the US.
Will Net Exports increase or decrease?
answer: decrease