General Securities Representative (Series 7) Practice Exam

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If the US dollar is revalued, what happens to the competitiveness of US goods?

  1. They become more competitive

  2. They become less competitive

  3. They remain very competitive

  4. They are not affected

The correct answer is: They become less competitive

When the US dollar is revalued, it means that its value has increased relative to other currencies. As a result, US goods become more expensive for foreign buyers since they have to spend more of their own currency to purchase the same amount of US goods. This increase in price typically leads to a decrease in demand for US exports, making them less competitive in the global market. In contrast, goods from countries with weaker currencies become relatively cheaper for US consumers, which may increase the demand for imports. This shift can further challenge the competitiveness of US goods abroad, as foreign buyers may turn to less expensive alternatives from other countries. Hence, the revaluation of the US dollar diminishes the competitiveness of US goods in international trade contexts.

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