Exchange rates play a big role in how countries trade with each other. They affect the prices of things we buy and sell around the world.
Here’s how it works:
Stronger Currency: If the U.S. dollar goes up by 10%, things sold from the U.S. become more expensive for people in other countries. This might lead to a drop in sales of about 4% to 5%.
Weaker Currency: On the other hand, if the dollar goes down by 10%, things from other countries may become cheaper for us. This could mean we buy about 3% more imports.
Trade Balance Effects: When the dollar is strong, the U.S. usually buys more than it sells, which is called a trade deficit. But when the dollar is weak, it can help the U.S. sell more than it buys, creating a trade surplus.
In short, the value of money can change how much we trade with others!
Exchange rates play a big role in how countries trade with each other. They affect the prices of things we buy and sell around the world.
Here’s how it works:
Stronger Currency: If the U.S. dollar goes up by 10%, things sold from the U.S. become more expensive for people in other countries. This might lead to a drop in sales of about 4% to 5%.
Weaker Currency: On the other hand, if the dollar goes down by 10%, things from other countries may become cheaper for us. This could mean we buy about 3% more imports.
Trade Balance Effects: When the dollar is strong, the U.S. usually buys more than it sells, which is called a trade deficit. But when the dollar is weak, it can help the U.S. sell more than it buys, creating a trade surplus.
In short, the value of money can change how much we trade with others!