Answer to Question #218593 in Macroeconomics for tray

Question

use a diagram to illustrate and explain the effect of political unrest in South Africa on the dollar / exchange rate

Answer 1

The political unrest will lead to a significant drop in the value of South Africa dollar. This I because political instability scares away foreign inveators.This reduce the cost of a country's exports thereby shrinking the trade deficits. This will then shift the is curve to the left.