1.10 International Economics & Currencies
Currency fluctuations impact trade balances and corporate earnings. You must know who benefits and who suffers when the US dollar strengthens or weakens.
Key FINRA Exam Takeaways
- Strong US Dollar: US goods become more expensive abroad (hurts US exporters); foreign goods become cheaper in the US (helps US importers). Trade deficit widens.
- Weak US Dollar: US goods become cheaper abroad (helps US exporters); foreign goods become more expensive in the US (hurts US importers). Trade deficit narrows.
- Balance of Trade: Difference between the dollar value of a nation's exports and imports.
Knowledge Checkpoint • Section 1.10
If the US Dollar appreciates significantly against foreign currencies, what is the expected impact on US international trade?