Instruction
- Review the changes in the exchange rate of the U.S dollar. Does the U.S. stand to gain or lose when the dollar gets stronger?
Make sure you support your points using economic reasoning and more so the content of the chapters in the module. Write clearly and precisely. Postings like, I agree or disagree, yes, no etc do not count.
You will respond to - "I think that an increase in the exchange rate of the U.S. dollar brings forth different effects to consider, but ultimately benfits the United States. The main effect to consider is that a higher exchange rate of the U.S. dollar will make inports cheaper for Americans companies and consumers. If the dollar's value compared to another currency increases, then those holding dollars will be able to buy imported goods at a lower cost as foregin goods lose their value. At the same time, companies doing business in the United States will also benefit because an increase in the value of the dollar will increase their total amount of sales and profits. This is good as it allows companies to have the necesseary income to continue investing in the United States. One of the downsides of a higher valued dollar is that domestic produced goods will now cost more to produce and will be sold at a lower price when exported. This will lead to a decrease in U.S. exports, but will encourage companies to sell domestically. When considering the effects of a higher exchange rate, the benefit to domestic companies and consumer is significantly better than the downsides. "
You will also respond to - "I personally think the U.S stand to gain because if the dollar gets stronger than the other currency on the basic of which import of the export is being done will have to pay less as compared to other countires. During the time of export in the international market exchange rates are fixed and fluctuating most probably on the daily basis of the current market price of the United States dollar and other dominating currencies like YEN, EURO, and INR. On the other side if there is a depreciation of the foreign currency can be different types of payments on the basis of foreign countries towards the U.S. "