SIE (Securities Industry Essentials) Practice Exam

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When the US dollar weakens, what tends to happen?

  1. The stock market immediately crashes

  2. Exports to foreign countries tend to increase

  3. Interest rates are reduced by the Federal Reserve

  4. Inflation rapidly decreases

The correct answer is: Exports to foreign countries tend to increase

When the US dollar weakens, it means that it's value decreases compared to other currencies. This makes US goods and services more competitive in the global market, resulting in an increase in exports. This is why option B is the correct answer. Options A, C, and D are incorrect because they do not reflect the impact of a weakening US dollar. Decrease in stock market, interest rates, and inflation are not necessarily correlated with a weaker currency.

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