Question
Suppose GDP increases more in the United States than it does in India. What is the shortrun impact of this change in GDP on U.S.
Suppose GDP increases more in the United States than it does in India. What is the shortrun impact of this change in GDP on U.S. net exports, the value of the U.S. dollar, and the value of the Indian rupee?
Net Exports / U.S. dollar / Indian rupee
A) Decrease / Depreciate / Appreciate
B) Increase / Depreciate / Depreciate
C) Decrease / Appreciate / Depreciate
D) Increase / Depreciate / Appreciate
E) Increase / Appreciate / Depreciate
Coursehero expert answer says D. Increase/Depreciate/Appreciate. I believe the answer should be C. Decrease/Appreciate/Depreciate. GDP increase in US means US consumers buy more imported goods. So, net exports decrease. Value of US$ is initially high and appreciates because of GDP. And therefore value of Indian rupee depreciates. Isn't C the correct answer?
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