Question

If the real exchange rate depreciates from 1 Japanese good per U.S. good to 0.5 Japanese good per U.S. good, then U.S. exports ______ and U.S. imports ______.

Answer 1

increase ; decrease

Step-by-step explanation:

the blank will be filled with increase ; decrease respectively.

when the exchange rate changes to 0.5 Japanese good per U.S. good from 1 Japanese good per U.S. good.

then it means that there is an increase in U.S. exports and decrease in U.S. import.

This makes the Dollar stronger and the Purchasing power of US dollar increase.