ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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U.S. investors in foreign assets, like bonds, savings accounts, stocks
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importers in foreign countries seeking cheaper raw inputs
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U.S. exporters selling capital equipment to the rest of the world
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U.S. travelers to foreign countries
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Detailed explanation-1: -The United States consumers will benefit from the dollar’s strengthening because imported goods’ prices will decline.
Detailed explanation-2: -Cheaper imports: If American goods become more expensive on the foreign market, foreign goods, or imports, will become cheaper in the U.S. The length to which $1 will stretch will go further, meaning you can buy more goods imported from abroad.
Detailed explanation-3: -With an appreciation in the domestic currency, customers can take advantage of cheaper imports and increase their purchases. Domestic goods might become expensive, which will ultimately cause the imported goods to become cheaper on the foreign market.
Detailed explanation-4: -Currency appreciation benefits consumers, as it makes foreign goods cheaper, but it harms national producers who face greater competition with foreign producers. A depreciation has the opposite effect.
Detailed explanation-5: -If the dollar appreciates (the exchange rate increases), the relative price of domestic goods and services increases while the relative price of foreign goods and services falls. 1. The change in relative prices will decrease U.S. exports and increase its imports.