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AP® Macroeconomics

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Impact of Inflation on Foreign Exchange and GDP

APMACR-7H3EJE

Assume the United States experiences a large increase in inflation. Which of the following would happen to US net exports, real gross domestic product in the United States, and the international value of the US dollar?

A

US net exports decrease; US GDP decreases; dollar value decreases.

B

US net exports increase; US GDP increases; dollar value increases.

C

US net exports decrease; US GDP increases; dollar value increases.

D

US net exports increase; US GDP increases; dollar value decreases.

E

US net exports decrease; US GDP increases; dollar value decreases.