Question

How U.S economy is affected if most countries peg their currency with Euro?

Answer 1

ANS : As if the currency of the Euro is being pegged than by pegging it's currency can gain Comparative trading advantages while protecting its own economic interests. A pegged rate, or a fixed exchange rate , can keep a country rates lower, which helps with exports . Conversely, pegged rates can sometimes leads to the higher long-term inflation.

As all the countries will prefer only the fixed exchange rate and not the pegged rate .But there is real advantage seen in the trade relationships between countries with low costs of production and economics with stronger comparative currencies . So as by pegging the currency , a country can gain comparative trading advantages while protecting its own economic interests.

A pegged rate , or fixed exchange rate can keep the country exchange rate low , helping with exports , as by pegging the currency of Euro it affects the US economy as by the exchange rate differs and through this pegging it's affects the US economy.

When the Euro is in the strong position relative to the dollar , imports from Europe cost more. American consumers see prices rise and may turn to domestic goods, boosting the revenue of American companies. Americans who travel to domestic goods, booting the revenue of American companies . Americans who travel to Europe see their money buy less when the Euro is stronger.