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A falling dollar gives American companies a chance to offer their products at bargain prices overseas. So unless you’re traveling abroad or buying imported goods, a continued slide in the dollar can be a good thing. But a falling dollar has other consequences that are not so obvious and, in some cases, not so pleasant. For starters, those record low interest rates that have made borrowing so cheap may soon begin moving higher again.
1. Exports cheaper. A devaluation of the exchange rate will make exports more competitive and appear cheaper to foreigners. This will increase demand for exports
3. Increased AD. A devaluation could cause higher economic growth. Part of AD is (X-M) therefore higher exports and lower imports should increase AD (assuming demand is relatively elastic). Higher AD is likely to cause higher Real GDP and inflation.
The correlation between any two variables (or sets of variables) summarizes a relationship, whether or not there is any real-world connection between the two variables. The correlation coefficient will always be between -1 and +1. These two extremes are considered perfect correlations. A negative coefficient means that the two variables, or sets of variables, will move in opposite directions (if one variable increases, the other will decrease); a positive coefficient will mean that the two will move in the same direction (as one increases, the other will increase). Read more: What is the correlation between American stock prices and the value of the U.S. dollar? www.investopedia.com... Follow us: Investopedia on Facebook
originally posted by: Bluntone22
a reply to: network dude
If I read your link correctly, the value of the dollar should be going up with the stock market.
But it is going down instead.
Did I not understand the article?
originally posted by: toysforadults
The laws of supply and demand would dictate that there is more available money right??
Shouldn't the dollar be going up in value?