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The Phillips Curve and Inflation - End of Chapter Problem Since 2021, the U.S. dollar has appreciated relative to the currencies of most of its trading partners. Consider the effect this appreciation of the U.S. dollar has on inflation in the United States. Please place cach scenario in the appropriate category bas on whether it describes a direct or indirect effect on inflation. Direct effect Indirect effect Imported inputs are cheaper for businesses, which may lead to decreases Foreign goods are cheaper for consumers, which decreases inflation. in prices, decreasing inflation. Competition with imported goods, which are now cheaper, causes Foreigners are less willing to buy American goods, which are now more businesses to lower their prices, decreasing inflation. expensive, causing buxinesses to lower their prices, decreasing inflation. Answer Bank