Since 2010, the U.S. dollar has appreciated relative to the Mexican peso. Consider the effect this appreciation of the U.S. dollar has on inflation in the United States. Please place each scenario in the appropriate category based on whether it describes a direct or indirect effect on inflation. Direct effect Indirect effect Answer Bank Competition with imported goods, which are now cheaper, causes businesses to lower their prices, decreasing inflation. Foreigners are less willing to buy American goods, which are now more expensive, causing businesses to lower their prices, decreasing inflation. Imported inputs are cheaper for businesses, which may lead to decreases in prices, decreasing inflation. Foreign goods are cheaper for consumers, which decreases inflation.