Question

Would the following groups benefit if the US dollar appreciated? Yes or No. Explain.

1. Dutch pension funds holding US government bonds.

2. US manufacturing industries.

3. Australian tourists planning a trip to the US.

4. An American firm trying to purchase property overseas.

5. American tourists planning a trip to London.

Answer 1

a) Dutch pension funds holding U.S. government bonds would be cheerful if the U.S. dollar appreciated. They would then get more Dutch guilders/dollars they earned on their United States investment. in other words, if you have an investment in a foreign country, you are better off if that country's currency appreciates and worse-off when depreciate.

b) The United States manufacturing industries would be not happy if the United States dollar appreciated because their prices would be more in terms of foreign currencies, which will fall their sales.

c) Australian tourists planning a trip to the United States would be not happy if the United States dollar appreciated because they would get less United States dollars for each Australian dollar, so their vacation will be higher expensive

d) An American firm trying to purchase property overseas would be cheerful if the United States dollar appreciated because it would get higher units of the foreign currency and could thus purchase more property.

e) American tourists planning a trip to the London would be cheerful  if the United States dollar appreciated because they would get more Australian dollar for each United States dollars, so their vacation will be less expensive