Initially trade between Australia and the United States is balanced. Then, if a change in the exchange rate increases the U.S. dollar price of Australian goods, ceteris paribus, we would expect

A) a trade deficit in the United States.
B) a trade surplus in the United States.
C) a trade deficit in Australia.
D) a trade deficit in both countries.

Exchange Rate

is the value of one currency for the purpose of conversion to another, determining how much of one currency can be exchanged for another currency.

Trade Deficit

A situation where a country's imports of goods and services exceed its exports, leading to a negative balance of trade.

U.S. Dollar Price

The cost of an item or service expressed in terms of the United States currency.