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Read the chapter's closing case, and then answer the question.

In terms of international trade competitiveness, which of the following is true when the dollar is weak?

A. US tourists enjoy lower prices abroad.
B. US firms find it easier to acquire foreign targets.
C. Exporters from the rest of the world find it easier to compete on price abroad, boosting worldwide trade.
D. Governments, firms, and individuals outside the US holding dollar-denominated assets suffer from value gain in their assets.



Answer :

GinnyAnswer

Final answer:

A weaker dollar benefits exporters worldwide and leads to increased competition abroad, while it can harm U.S. firms selling abroad.


Explanation:

When the dollar is weak in terms of international trade competitiveness, exporters from the rest of the world find it easier to compete on price abroad, boosting worldwide trade. A weaker dollar means that foreign goods are more expensive for U.S. purchasers, leading to a decrease in U.S. imports, which can negatively impact foreign exporters. Additionally, a stronger U.S. dollar can harm U.S. firms selling abroad because the stronger dollar reduces their profits when converting foreign currency back to U.S. dollars.


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