Answer to Question #82787 in Macroeconomics for Patricia Ann-Marie

Question

what is a U.S. weak dollar?

Answer 1

A weak US dollar is the result of monetary policy aimed at increasing the money supply in the market. Such a policy implies: buying securities, reducing the reserve ratio, reducing the discount rate. The result of this policy will be an increase in the money supply, which will lead to a decrease in the interest rate and an increase in the volume of investments, aggregate demand, as well as equilibrium GDP. In addition, a weak dollar will create a competitive advantage when exporting products, since goods will be cheaper compared to peers from other countries.