Final answer:
Factors that influence the choice between internal or external exchange include exchange rates and their impact on economic actors, such as exporters, tourists, and investors. Exchange rates can benefit or burden these groups while the potential for externalities can affect unrelated third parties.
Step-by-step explanation:
The question pertains to the factors affecting the decision for choosing internal or external exchange mechanisms and how these choices affect various economic actors. Exchange rates play a crucial role in determining the benefits or detriments to different groups. For example, a stronger U.S. dollar can have varied impacts:
- U.S. exporters selling abroad may find it more difficult to sell their goods as they become more expensive for foreign buyers.
- Foreign exporters selling in the U.S. may benefit as their goods become relatively cheaper for U.S. consumers.
- U.S. tourists abroad will find their currency has more purchasing power, making travel more affordable.
- Foreign tourists in the U.S. may find their trip more expensive as their currency is weaker relative to the dollar.
- U.S. investors looking overseas will find investments more attractive as they can potentially get more for their dollar.
- Foreign investors may be deterred from the U.S. market due to a strong dollar making investments more expensive.
Additionally, it's important to consider externalities in these exchanges, which can affect third parties not directly involved in the transactions.