Answer to Question #148592 in Macroeconomics for muhammad zubair

Question

US dollar has recorded a jump of 5.50 paise per dollar (p/$) in the last one month; this situation might bring smiles and sorrows to different types of traders (exporters and importers).’’ Justify the given statement.

Answer 1

On exporters, an upward thrust in US dollars bothers US corporations that export alot of items to other countries. Since their products are priced in dollars, the exports to be extra high priced for the overseas buyers and companies that have to pay for them in other currencies. The fee of the income they make on export sales falls when they convert foreign income to domestic income.

On importers, a rise in dollars results to the fee of imported goods dropping and customers are capable of purchasing the goods for fewer dollars. Manufacturers preserve their fees steady growing their margins. They can additionally drop their costs to snatch a greater quantity of the market without incurring any loss. This compensates for the loss of charge from competitors due to a better greenback each at domestic and abroad.