Question

In: Operations Management

After listening to the lecture, viewing the clips and reading the articles, the class should have...

After listening to the lecture, viewing the clips and reading the articles, the class should have an understanding of the global impact of the movement of the U.S. Dollar.

The current U.S. President has stated in strong and at times disparaging terms that the dollar was far too strong relative to our trading partners. Notwithstanding his comments and other factors since the beginning of the year, the dollar remains strong relative to other currencies.

Please discuss the following questions in your groups:

1. What are the implications of a strong dollar to U.S. trading partners?

2. How does this benefit or harm, American consumers?

3. Does it benefit American workers?

Solutions

Expert Solution

1. What are the implications of a strong dollar to US trading partners ?

A strong dollar relative to the currencies of US trading partners generally make the US import cheaper to US consumers and US exports more expensive to buyers from foreign countries.It will increase the cost of import for the trading partner but at the same time the reveue from export will be increased in local currency term. It's probably net negative if country's import is more than the export. It's probably net positive if country's import is less than the export.

2. How does this benefit or harm, American consumers?

A stong dollar makes foreign goods cheaper for the US consumers who will clearly enjoy the buying cheaper imported products. But it hurts US exports as it will become costly for other countries and therefore it hurts US production and employment. It also makes the US a costly travel destination for visitors from other countries.

3. Does it benefit American workers?

No. A strong dollar hurts the US prouction which leads to higher unemployment. For example, a strong dollar against the euro currency will weaken the Euro. European Union products will become more affordable to US citizens. It helps European Nations to increase production and employment at the cost of US production and employment.

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keosha answered 2 months ago
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