Which statement about a falling dollar value in the global market is correct?

• A. A falling dollar value reduces the cost of imported goods in the United States.
• B. A falling dollar value increases the purchasing power of Americans abroad.
• C. A falling dollar value has no impact on international trade.
• D. A falling dollar value makes U.S. exports cheaper for foreign buyers.

Answer: (D)

Verified step by step guidance

1. Understand the concept of the dollar value falling in the global market, which means the exchange rate of the U.S. dollar decreases relative to other currencies.
2. Recall that when the dollar value falls, it takes more dollars to buy the same amount of foreign currency, making imports more expensive for Americans.
3. Recognize that a falling dollar reduces the purchasing power of Americans abroad because their dollars convert into fewer units of foreign currency.
4. Analyze the impact on exports: a weaker dollar makes U.S. goods cheaper for foreign buyers since their currency now buys more dollars, encouraging more exports.
5. Conclude that the correct statement is that a falling dollar value makes U.S. exports cheaper for foreign buyers, which can boost U.S. export volumes.