If they changed the penny to be worth a nickel how does that effect the US and world economy, or does it?

Answer 1

Hi,

I am not from the US but my hypothesis is 1 nickel = 5 US dollar cents while a penny = 1 US dollar cent.

If somehow the value a penny was worth a nickel this would mean that the purchasing power of the currency would have increased by 400%. This means that with a penny you would be able to buy in the future what you buy today with a nickel. This is called deflation.

It is difficult to answer your question on the impact of this change if you don't know the source of the change. Usually deflation is associated with a stagnant economy. That is an economy where there is too much supply (too many things to buy) and very little demand (not enough people with money to buy). In this situations prices will decrease so you will be able to buy with a penny what you could buy in the past with a nickel.

If you hypothesis is deflation due to a stagnant economy then the impact in the world economy would be very bad because the US economy plays a big role in world trade. The US buys more products from other countries than what it sells to the outside world hence if the US buys very little and prices go down the economies of foreign countries are negatively affected.

Did I just do your homework?

Answer 2

The value of the US Dollar will go down even more compared to the Euro, English Pound, and other international monetary units.