Question 55

US exports increase when foreign demand for dollars rises.

When foreign demand for dollars rises, it indicates that other countries are seeking to purchase more US goods and services, leading to an increase in US exports.

A) falls

If foreign demand for dollars falls, it suggests that other countries are less interested in US products, which would likely decrease US exports. Lower demand for dollars means fewer transactions and reduced purchasing power for imports from the US.

B) rises then falls

While an initial rise in foreign demand could temporarily boost exports, the subsequent fall would negate any benefits gained. This fluctuation does not provide a sustained increase in exports, and thus is not a definitive answer to the question.

C) rises

An increase in foreign demand for dollars directly correlates with a heightened interest in US exports, as other countries will need dollars to purchase American goods. This relationship enhances trade and encourages economic growth, making this the correct answer.

D) stays same

If foreign demand for dollars remains the same, there is no change in the purchasing behavior of foreign consumers regarding US products. This stagnant demand would not stimulate an increase in exports, making this option incorrect.

Conclusion

The correct answer is C because an increase in foreign demand for dollars signifies a greater willingness to buy US exports, thereby driving economic activity. All other options either indicate a decrease in demand for exports or fail to provide a clear link to increased sales, thus confirming that only option C is accurate in this context.