--%>
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 : Market imperfection associated with

    Question: This assignment in Economics, deals with macro-economics. An essay on Market imperfection associated with negative externalities. According to Economics, perfect markets would require an "invisible hand" to allocate all the resources to be a

    		•
  • Q : Money-just another good ‘What occurs in

    ‘What occurs in the money market when there is a raise in income?’

    		•
  • Q : Principles of macroeconomics Explain

    Explain the concept of “economies of scale” and “increasing returns”.

    		•
  • Q : Redistribution of Income through budget

    Redistribution of Income: Each and every economy strives to achieve a society, where inequality of income and wealth must be minimum. In order to attain this objective via government budget the government spends adequate money on social security schem

    		•
  • Q : Domestic inflation of fixed or managed

    Question: A county with a fixed or managed exchange rate would consider i.___________________ its currency if the country is worried about domestic inflation. ii. Briefly Explain?

    Q : Cost of a foreign currency When cost of

    When cost of a foreign currency increases its supply too increases. Elucidate why?

    		•
  • Q : Problem on equivalent Consumer Surplus

    Tom reimburses $5.00 for a ticket to see a present hit movie. If Tom was willing to reimburse up to $7.00 for that ticket, his consumer surplus equals: (1) $5.00 (2) $2.00 (3) $7.00 (4) Tom does not receive any consumer surplus as he purchased the ticket.

  • Q : Effect of flood on demand Mold which

    Mold which destroyed the hamburger crop following a flood would be most probable to slash the demands for: (1) Fried chicken with mashed potatoes and gravy. (2) Soda pop and water. (3) Cucumbers, carrots, and egg plant. (4) Mustard and ketchup. (5) Tofu and sushi.

    		•
  • Q : Fiscal deficit in government budget

    What does fiscal deficit in government budget mean? Answer: This means more borrowing on the portion of government.

    		•
  • Q : Maximizing consumer utility The

    The consumer maximizes the utility whenever spending patterns causes: (i) Total outlays to increase each time prices are altered. (ii) Marginal utilities of each and every good consumed to be equivalent. (iii) Marginal utilities from the last cent spent on each and ev

    		•