Go to the Web site of the Federal Reserve Bank of St. Louis Federal Reserve (FRED) (http://research.stlouisfed.org/fred2/) and download monthly data on the tradeweighted exchange rate for the U.S. dollar against major currencies (TWEXMMTH) from 1973 to the present.

a. What has been the long-term trend in the exchange value of the dollar? What effect should changes in the exchange rate during this period have had on U.S. net exports?

Briefly explain.

b. What has been the trend in the exchange value of the dollar over the past year? What effect should changes in the exchange rate during the past year have had on U.S. net exports? Briefly explain.