Intermediate goods from abroad that are imported by U.S. companies are known as

Question

Intermediate goods from abroad that are imported by U.S. companies are known as imported inputs. The relative prices of these imported inputs affect the costs of production for U.S. goods. Evidence suggests that the changes in aggregate demand are more significant than those in aggregate supply.

In the U.S. computer industry, many imported inputs come from East Asia. The following question focuses on the relationship between the U.S. and Indonesia. Suppose the U.S. dollar has recently appreciated relative to the Indonesian rupiah.

3.1. When the U.S. dollar appreciates relative to the Indonesian rupiah, which of the following occurs?




A. U.S. net exports rise.

B. U.S. companies import more intermediate goods from Indonesia.

C. U.S. aggregate demand increases.

D. U.S. production costs rise.

Explanation / Answer

B. U.S. companies import more intermediate goods from Indonesia.

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