I was curious if anyone has a list of reasons on why the USD value is dropping while the US economy in in a tremendous boom and how the goverment might be able to repair its value.
2006-10-27 12:27:23 · 3 answers · asked by mvolosen 2 in Social Science ➔ Economics
The first answer is correct as far as it goes. The rest of the cause of the low USD is the capital account. The $ is usually low when oil prices are high. So the Government's best contribution to "repairing its value" would be to get the troops out of Iraq and stop meddling in Middle East politics.
Like hell they will, but you asked an economist.
By the way, the low $ is one of the causes of the boom. It boosts the value of US goods and services at home relative to imports, and it cuts the cost of exports in foreign markets. Both help US companies to make money. This only becomes a problem in so far as it also causes inflation.
2006-10-29 01:51:58 · answer #1 · answered by MBK 7 · 0⤊ 0⤋
A big reason for the relative fall in the USD, is the trade deficit the US has. When a country has to import a large amount of goods, the country has to sell domestic currency and purchase foreign currency. Think of it as the basic rules of supply and demand on the open market. The trade defect means the US has to sell a large number of Domestic currency. Supply on the international market goes up. The relative price goes down. In this case the relative price is the exchange rate
2006-10-27 19:46:09 · answer #2 · answered by Just Wondering 3 · 0⤊ 0⤋
Seriously, since when has government repaired anything? It is best government just stay out of the way.
.
2006-10-27 23:38:57 · answer #3 · answered by Zak 5 · 0⤊ 0⤋