Question

Times New ... - E EEE ECONOMIC SCENARIO Aggregate demand and aggregate supply curves shift for different reasons than individual demand and individual supply curves. From America, exports have increased tremendously in the past year. Unemployment is very low, American living standards have increased, and the US Dollar has decreased against several major currencies. Considering the above information, please answer the questions below. 1. How does a currency that is down against other currencies hurt America? Or, does it not hurt America? 2. If you were president, how would you use tariffs to help improve the American economy? ADDITIONAL INSTRUCTIONS. 1 - Answer the information by writing your paragraphs under each question. 2-REMEMBER to list the economic principal, idea, or concept that verifies your opinion.

Answer 1

1 When the exports are increasing and unemployment is falling, the Aggregate Demand increases. The US dollar decreasing against other currencies means that it is becoming weaker A weak currency can benefit a nation by boosting the exports and reducing the trade deficits. But when a currency is down it can harm the import sector. The prices of imports rise. The lower imports reduce the productivity of the nation in long run. Due to higher aggregate demand, inflation is caused. This is called demand pull inflation Otherwise too, it can lead to a currency war being started where other nations also devalue their currencies. In that scenario, none gains from the weak currency.

2 In the case of a weak dollar, imports are expensive, and exports are cheap. This could lead to retaliatory tariffs by other nations. In order to avoid such a condition, a president should lower the tariffs on imports. If America was having a strong currency, then it could raise the tariffs on imports to protect its economy. But as it is facing a weak currency and the imports are falling, it can lower the tariffs on imports, and it can also initiate export tariffs in industries where the local consumers are not getting access to the goods produced domestically