Foreign Exchange
#1: Go to the FRED ( foreign exchange rates “by country” site (Links to an external site.) and pick the currency of one on the major trading partners of the United States. The currencies of our major trading partners include the Euro, Canadian dollar, Japanese Yen, Chinese Yuan, British Pound, and the Mexican Peso. Examine the ten-year chart for the currency that you have chosen.
Describe the pattern of the fluctuations in the exchange rate since January 2020. Describe the pattern of the fluctuations in the exchange rate over the past decade. Is there a trend? Explain whether the dollar appreciated or depreciated over the past decade against the currency that you have chosen? You are encouraged to embed a chart from FRED into your post. (Links to an external site.)
#2: What factors in general influence the change in value of the U.S. dollar or any floating currency? Cite your source for this answer whether it be from your textbook or elsewhere. Would a stronger dollar be good for the U.S. economy? Describe who would be the winners and losers from the appreciation of the U.S. dollar against the currencies of our major trading partners using the currency that you picked as an example in #1? Be specific regarding the effects on firms, consumers, tourists, and investors! Explain your reasoning and give specific examples. Hint: See Figure 16.4 ( ) in your free text.
#3: Considering the economic shock caused by the pandemic would you advocate a stronger or weaker dollar policy to stimulate economic activity in the United States. Explain your reasoning using the concepts that you have learned in Chapter 16 (Links to an external site.) . How would this policy change behavior and impact the domestic economy as a whole?
