An appreciation of the United States Dollar on the foreign exchange market could be
caused by a decrease in which of the following?
A. United States interest rates
B. The United States consumer price index
C. Demand for the dollar by U.S. residents
D. Exports from the U.S.
E. The tariff on goods imported into the U.S.
When the price level of a country is lower than that of its trading partners, the country with a lower price sees their currency appreciate. Why? It's cheaper to buy there. On the AP, there are three reasons for international trade. Relative interest rates, and Income differences are the other two.