How does a stronger dollar affect your industry

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Reference no: EM133473186

Question 1. In 2014, the euro was trading at $1.35 per euro on the foreign exchange market. By 2015, the rate had fallen to $1.10 per euro due to falling European interest rates. Did this fall in the price of a euro occur due to a shift in the supply curve, the demand curve, or both? Please provide a figure that illustrates this change in the price of the euro.

Question 2. Changes in the per-dollar exchange rate have opposing impacts on importers and exporters in the US market. If the dollar strengthens (e.g., euros-per-dollar exchange rate increases), then goods imported from other countries become more affordable for US buyers. In contrast, if the dollar weakens (e.g., euros-per-dollar exchange rate decreases), then US good exported to other countries become more affordable for foreign buyers. Does your industry rely more on imported inputs or export sales? How does a stronger dollar affect your industry? What actions could your firm take to protect profits in response to a stronger dollar? Please explain your responses.

 

Reference no: EM133473186

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