Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 25, Problem 1.4P
To determine
Why people in Zimb accepts the US dollar as payments for the goods and services.
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The U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…
The U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…
The euro is the official currency of almost all of the European Union as well as several smaller countries. It is the second-most traded currency in the world after the United States dollar. As of August 2018, with more than €1.2 trillion in circulation, the euro has one of the highest combined values of banknotes and coins in circulation in the world, having surpassed the U.S. dollar. By March 2002 it had completely replaced the former currencies of the European Union countries.
Do you think that a common currency for North America (the U.S., Canada and Mexico) would be a good idea? Would it help facilitate trade? Why?
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Principles of Economics (12th Edition)
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- To ensure that paper money will be accepted, the U.S. government implicitly promises the public that Group of answer choices it will not change currency denominations so that the paper currencies U.S. citizens have will continue to be used for exchanges. the U.S. monetary system will always be backed by a precious metal. it will not print money so fast that it loses its value. it will not change the rate at which the dollar is exchanged for other currencies.arrow_forwardEconomics After falling in half from 1947 to the 1970s (around 10 percent to 5 percent), the share of currency in circulation - also called "cash" - has been relatively stable. It's actually been increasing since the Financial Crisis, but this is probably due to the United States shipping more currency to foreign countries who want to hold and use dollars. In any case, many people find the fact that cash hasn't disappeared in the electronic era with a lot of new forms of payment (like prepaid cards, Venmo/Zelle, etc.). What do you think are the most important reasons why cash is still being held and used today?arrow_forwardThe principal reason(s) that so much U.S. currency is held outside the U.S is (are). banks all around the world find it convenient to hold large amounts of U.S. dollars U.S. citizens and corporations spend a lot of dollars abroad many people around the world trust the U.S. dollar more than any other currency all of the above none of the abovearrow_forward
- The U.S. economy is faltering, so the value of its associated currency, the dollar, is likely toarrow_forwardAt the end of 2021, the Federal Reserve took an inventory of its foreign currency reserves. Since the previous year, the following had changed: How much did NCO change during this time period? Round to two (2) decimal places Currency (+/-) Change (millions) Yen 44.08 Yuan -9.78 US Dollars -45.15 Rupees 62.63 Riyals 66.59 Pesos 91.19 Shekels -92.54arrow_forwardWhat are the four determinants of the demand of the Canadian dollar?arrow_forward
- Although it is a member of the European Community, Denmark is not part of the eurozone; it has its own currency, the krone. Because the krone is pegged to the euro, Denmark's central bank is obliged to maintain the value of the krone within 2.25 percent either above or below the value of the euro. According to an article in the Wall Street Journal, in 2017, the Danish central bank was forced to intervene in foreign currency markets "to keep the krone from strengthening too much." If the krone was strengthening, did it take more kroner to exchange for a euro or fewer kroner? Briefly explain. More kroner, because the krone has more value. Fewer kroner, because the krone has less value. Fewer kroner, because the krone has more value. More kroner, because the krone has less value.arrow_forwardWhy do highly inflated countries such as Brazil tend to have weak home currencies?arrow_forwardDiscuss the kinds of money that were used at Japanese Occupation of the Philippinesarrow_forward
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