Question

An advantage of a strong dollar includes which of the following​ item(s)? A. Companies importing goods have greater buying power because their dollars now go further overseas. B. Companies with substantial​ outside-U.S. operations see their overseas​ expenses, like salaries paid in​ Euros, become more expensive. C. All American firms benefit from a rising value of the dollar. D. A strong dollar gives U.S. companies less firepower for international acquisitions. E. The advantages offset the disadvantages for nonprofit firms

Answer 1

Option A is the only correct option because the US companies can import products which are expensive in other currency but are not cheaper in our currency. This means if roller coaster machine US wanted to import in the year 2018 was costing $30m. Due to the strengthening position of dollar, it would cost now $25m so it is now an attractive investment because of increased purchasing power due to strengthening position of dollar.

Furthermore the company that is paying its oversees employees are to be paid less in dollars. And also that exporter's product prices increases due to the strengthening position of dollar. This gives products of other countries a competitive advantage over the US companies.

The importers now can import more and exporters can export less. Furthermore the US companies are in position now to invest in acquisition of foreign companies with less spending of Dollars than before. The advantages and disadvantages are not equal in amount.