ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Businesses that import goods from the UK to sell in the USA
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Businesses that import components from the UK to put into their manufactured goods
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Businesses that export goods to the UK to sell there
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No US businesses benefit
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Detailed explanation-1: -A falling dollar diminishes its purchasing power internationally, and that eventually translates to the consumer level. For example, a weak dollar increases the cost to import oil, causing oil prices to rise. This means a dollar buys less gas and that pinches many consumers.
Detailed explanation-2: -A fall in the value of the pound will increase the price of goods and services imported into the UK from overseas. That’s because when the pound is weak against the dollar or euro, for example, it costs more for companies in the UK to buy things such as food, raw materials or parts from abroad.
Detailed explanation-3: -A weak pound piles pressure on the costs of goods, which can in turn, push up inflation. When inflation rises, interest rates rise, and when that happens, millions of people on tracker mortgages see their monthly payments rise almost instantly.
Detailed explanation-4: -In other words, a depreciating dollar (or stronger, more expensive euro) makes U.S. exported goods cheaper based solely on the exchange rate move. It’s important to note that the weaker dollar can eventually lead to an increase in demand for U.S. goods or exports from foreign companies.