The change in the exchange rate affects the national balance
1. The change in the exchange rate affects the national balance. Suppose the relative value of the U.S. dollar has gone down recently. How would this affect the U.S. national balance and net exports? Explain this using at least 100 words with relevant economic concepts and theory. Answer in couple sentences
2. Agree or disagree within 2-3 sentences
In the event that the U.S. dollar depreciates, or drops in relative value to foreign currencies, and the domestic price level, income / employment and interest rates all remain the same, then the U.S. national balance will benefit. Under these conditions, exports will increase and imports will decrease as net aggregate demand of substitute domestic products increases. With other economic contributing factors remaining constant, the U.S. will see an increase in the net aggregate demand of domestically produced goods.
Answer preview to the change in the exchange rate affects the national balance
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