a Explain why a stronger dollar could enlarge the U S balance of trade deficit Explain why a weaker dollar could affect the U S balance of trade deficit b It is sometimes suggested that a floating exchange rate will adjust to reduce or eliminate any current account deficit Explain why this adjustment would occur c Why does the exchange rate not always adjust to a current account deficit

Question: a. Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. Explain why a weaker dollar could affect the U.S. balance of- trade deficit.

a. Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. Explain why a weaker dollar could affect the U.S. balance of- trade deficit.
b. It is sometimes suggested that a floating will adjust to reduce or eliminate any current account deficit. Explain why this adjustment would occur.
c. Why does the not always adjust to a current account deficit?

Step by Step Solution

★★★★★

3.49 Rating (179 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a A stronger dollar makes US exports more expensive to importers and may reduce imports It makes US ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

129-B-F-I-F-M (372).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!

A relatively small U.S. balance of trade deficit is commonly attributed to a strong demand for U.S. exports. What do you think is the underlying reason for the strong demand for U.S. exports?

It is sometimes suggested that stocks with low priceearnings ratios tend to be under priced. Describe a possible test of this view. Be as precise as possible.

It is sometimes suggested that since retained earnings provide the bulk of industrys capital needs, the securities markets are largely redundant. Do you agree?

Explain what is "Dumping"? Explain how the use of tariffs and quotas by a country affect its imports and balance of trade, and current account, assuming all else kept constant. Chapter 2, Question...

Answer only questions b. and c. Explain how the use of tariffs and quotas by a country affect its imports and balance trade, and current account, assuming all else kept constant. Exchange Rate...

Question No-2 5+5 a) U.S.-based MNCs commonly invest in foreign securities. i) Assume that the dollar is presently weak and is expected to strengthen over time. How will these expectations affect the...

Chapter 2 12. International Investments U.S.-based MNCs commonly invest in foreign securities. a. Assume that the dollar is presently weak and is expected to strengthen over time. How will these...

Exchange Rate Effects on trade a. Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. b. Explain why a weaker dollar could affect the U.S. balance-of-trade deficit. c .It...

13 Exchange rate effects on trade a Explain why a stronger dollar could enlarge the Australian balance-of-trade deficit. Explain why a weaker dollar could affect the Australian balanceof- trade...

1. Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. Explain why a weaker dollar could affect the U.S. balance-of-trade deficit. 2. Governments of many countries enact...

The accountant for Statos Company makes the assumptions or performs the activities in the list that follows. Tell which of these concepts of accrual accounting most directly relates to each...

Repeat question 9 but this time assume that Rollins, Inc., expects the 180-day forward rate of the pound to substantially overestimate the spot rate to be realized in 180 days.

Suppose the equilibrium price set by supply and demand is lower than the price ceiling set by the government. The result will be a. a shortage. b. that quantity demanded is equal to quantity...

15.10 State SAT scores. Figure 14.11 (page 331) plots the average SAT Mathematics score of each states high school seniors against the percentage of each states seniors who took the exam. In addition...

Matt has found a condominium in an area where he would enjoy living. He would need a $ 5,000 down payment from his savings and would have to pay closing costs of $ 2,500 to purchase the condo. His...

Matt paid mort-gage interest of $ 4,330 during his first year in the condo. His property taxes were $ 600, and his homeowners insurance was $ 460. If Matt is in a 25% marginal tax rate bracket, what...

Doug and Lynn bought their home three years ago. They have a mortgage payment of $ 601.69. Interest rates have recently fallen, and they can lower their mortgage payments to $ 491.31 if they...

Sir i am stuck for this question Question 4 10 points Save Answer The mortality rate of COVID-19 can be estimated by taking the ratio of number of coronavirus deaths to the total number of infected...

Q2. You are interested in buying some put protection for SP500 ETF SPY. SPY trading at 470. You are interested in a PUT option with 25 delta (ie delta per PUT is -0.25). Annual sigma is $125. DTE is...

If you use a 0.05 level of significance in atwo-tail hypothesistest, what decision will you make if ZSTAT=+1.82? Click here to view page 1 of the cumulative standardized normal distribution table.1...