Question

What happens to the supply of U.S. dollars if U.S. consumers prefer foreign goods to domestic items?

Answer 1

When U.S. consumers prefer foreign goods, it leads to a decrease in the supply of U.S. dollars.

Step-by-step explanation:

A weaker U.S. dollar means that foreign currency is more expensive, leading to an increase in the price of foreign goods for U.S. consumers. As a result, U.S. consumers may prefer to purchase foreign goods over domestic items. This preference for foreign goods leads to a decrease in the demand for domestic products, resulting in a decrease in the supply of U.S. dollars.