--%>
Assignment Help - homework help

Export business prefer rising or declining dollar

Would export businesses choose a rising or declining dollar? Would it be similar for a European tourist on a budget and visiting the Grand Canyon? Explain your answer.

E

Expert

Verified

Export businesses would prefer a declining dollar. Yes, it would be the same for a European tourist on a budget and visiting the Grand Canyon. As the dollar declines, more dollars are necessary to buy a specific amount of foreign currency and less foreign currency to exchange for more dollars. Thus in the case of US exports, a declining dollar facilitates the improvement of sales in foreign countries, because the US goods will be available cheaper. In short, US export goods become comparatively less expensive as compared to domestic goods. More foreign consumers will hence prefer buying US goods. Hence US companies will naturally export more goods to make profits out of the available opportunity. Thus export businesses would prefer a declining dollar.

In a similar manner, when dollar declines, travel to US becomes less expensive for foreigners, since they can exchange their currency for more US dollars. When a European tourist visits the Grand Canyon, he/she can exchange less Euros for more dollars, which could be spent as his/her tourism expenses. So tourists on budget can easily afford to visit US in a period of declining dollar. Thus export business and foreign tourists would prefer a declining dollar (Federal Reserve Bank of Chicago, 1997).

   Related Questions in Macroeconomics

  • Q : Positional Goods problem Can someone

    Can someone help me in finding out the right answer from the given options. In accord with the theories of Thorstein Veblen, the positional goods from which the owner or user of the good derives the jollies mainly since of the power, class and status signaled by the p

    		•
  • Q : When people purchase goods People will

    People will purchase goods when their demand prices equivalent or surpass: (i) Transaction costs. (ii) Subjective prices. (iii) Price indexes. (iv) Market prices. (v) Wholesale prices. Please someone suggest me the right answer.

    		•
  • Q : Define Demand schedule What is Demand

    What is Demand schedule and how it is associated to demand curve?

    		•
  • Q : Domestic Investment & Economies

    Question: How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world, investment in both economi

    		•
  • Q : Determinants of transaction demand.

    With the help of graph discuss the determinants of transaction demand.

    		•
  • Q : Fiscal Monetary changes With the

    With the general equilibrium framework in place, the stage is now set for introducing fiscal and monetary changes and analysing their effects on the general equilibrium. We will first introduce a fiscal change in the form of increase in deficit-financed expenditure, a

    		•
  • Q : MPC What relationship does the MPC bear

    What relationship does the MPC bear to the size of the multiplier? The MPS? What will the multiplier be when the MPS is 0, .4, .6, and 1

    		•
  • Q : Define Devaluation Devaluation means

    Devaluation means decrease in the external value of a country’s currency as an aware policy measure adopted by the Government of a country. In another words, we make our currency less costly in terms of foreign currency. This builds our goods ch

    		•
  • Q : Why government taken as capital receipt

    Why the borrowings by Government are taken as capital receipts?

    		•
  • Q : Define voluntary unemployment Voluntary

    Voluntary unemployment: It refers to a condition when person are not willing to do work at customary market wage rate, though they are receiving a work.

    		•