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Chicago Fed Letter, No. 07, March 1988
Dollar Drop Helps Those Who Help Themselves

A depreciation in the exchange value of the dollar should increase the dollar price of U.S. imports. In response, domestic consumers should purchase fewer of those now more expensive imports. If the quantity purchased (“real imports”) declines by a greater percentage than the price increased, then the total nominal or “current dollar” value of imports declines. So, a weaker dollar should reduce the total dollar value of imports.

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