Foreign Exchange Graded Assignment | Read Chapter 11 | Back to Assignment Due Fr

Question

Foreign Exchange Graded Assignment | Read Chapter 11 | Back to Assignment Due Friday 12.01.17 at 11:45 PM Average: 2 Attempts: 5. Equilibrium rate of exchange Suppose that, initially, the foreign exchange market between the United States and Australia is in equilibrium. Aa Aa However, over time, the supply of the Australian dollar shifts to the right, causing the U.S. dollar to appreciate against the Australian dollar. Which of the following is a disadvantage of this change in the supply of foreign currency for the United States? O U.S. consumers face higher prices on Australian goods. O U.S. exporting firms find it easier to sell goods on Australian markets. O U.S. exporting firms find it more difficult to compete in the Australian market. O U.S. consumers face lower prices on Australian goods. QNA 3.16 (© 2004-2016 Aplia. All rights reserved. Graphs Tool 1.55 2002-2013 Cengage Learning. All rights reserved Grade It Now Save & Continue 2013 Cengage Learning except as noted. All rights reserved. Continue without saving

Explanation / Answer

The disadvantage in the above change in the supply of foreign currency for united states will be that u.s exporting firms find it kore difficult to compete in the Australian market because as rhe u.s dollar has appreciated in comparison to Australian currency that tends to increase in the price of goods in u.s manufactured goods that results in increase in the prive of goods to be exported from u.s and rhe imports in Australia becomes costly therefore it becomes difficult for u .s firms to compete in Australian market as their goods bevomew costlier in the Australian market due to appreciation of theor currenvy as compared to Australian currency.

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