Question: NEED HELP WITH THE CONCLUTION Is a strong dollar better than a weak dollar? No, the strength of the current depends on interest rates, economic

NEED HELP WITH THE CONCLUTION

Is a strong dollar better than a weak dollar? No, the strength of the current depends on interest rates, economic policies, and stability. The purchasing power parity is the exchange rate that equalizes the prices and dollar of all internationally traded goods. When the exchange rate for a countries currency rises, it is strengthening (or appreciating), and when it falls, its currency weakens (depreciates). The strengthening of one means that there must be a weakening in the other in the economy. The strong US dollar hurts overseas relations. Tourists visiting have a disadvantage since they have to provide a lot of their own currency to purchase to US dollar. Long term effect of overseas consumers to turn away from American goods. US companies with abroad business are hurt. Income they earn from foreign sales will decrease. Some companies use derivatives to hedge currency exposures but not all do. Hedge- currency rule that guarantees a certain exchange rate so it will not be hurt if the exchange rate decreases and they will not lose money. Hurts emerging economic. In 1970-2014, during the US dollar appreciation, the real GDP growth in emerging markets slows. During depreciation of the US dollar, many domestic countries will have ahigher domestic demand. However the outlook for the dollar seems like it will continue to rise in the future. The weaker dollar would boost the American economy. A weaker greenback would make American goods more attractive abroad. Goods in the US will seem cheaper and Shrink the trade deficit. Give American companies a boost through stronger overseas sales. Help emerging markets borrowers, especially countries with a high load of dollar-denominated debt but not enough money to pay it backTrump frequently accused China of keeping its currency, the yuan, intentionally low to make exports cheaper, and therefore increase the trade imbalance. The current Yuan is around an exchange rate higher than 7, compared to the U.S. dollar. Many people would see the words strong and weak and think that strong is always better. When it comes to the value of the American dollar, it is not always true. Even though the word Strong dollar sounds good, and in many regards it is. It depends on how you earn your money and spend your money. The meaning of a Strong dollar is how it is measured up against currency in other countries or how much it buys compared to foreign currency. According to (Walla 2015), when the value of the dollar is strong it is not necessarily better; the dollar being weak isn't always a bad thing. The value of currency gets stronger when you can purchase more foreign currency than before. Of course, just the opposite is true when the value of the currency is weaker. When one country's currency value increases and gets stronger that means that the other countries value gets weaker. There are some benefits to having a weaker dollar. The weaker U.S. dollar will enhance the options for foreign countries to do business within the United States. It will also benefit the tourism industry for us in America. If the tourist is looking for travel locations and their dollars can go farther than before, they are more willing to travel here. The weaker dollar can also improve how competitive the market is with U.S. goods. Having a weaker dollar value will cause sales to increase, and manufacturing facilities will find the need to produce more for the market. The biggest issue with having a weak dollar is inflation. If the dollar value is weak, you will see an increase in many different commodities, and consumers will not be able to afford the higher prices. According to [Kat09], If inflation gets out of control, the central bank may have to tighten their monetary policies. Looking at the benefits of a strong dollar, we can see that buying power for Americans improves if they are spending their dollars in other countries. If you are American and work or live overseas and are paid with American currency, then your cost of living will go down. There is a benefit for foreign companies that do business in the U.S. because they will have a larger number of sales. When the dollar is strong in the United States, the amount it cost for people to travel to the U.S. increases, therefore, travel will drop, and we will lose those dollars the tourist would have spent. The number of products that would have been exported will be negatively impacted because they will be able to purchase things cheaper that come from their country.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

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

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!