Question

Indicate whether each of the following groups would be happy or unhappy if the U.S. dollar appreciated.

a. U.S. pension funds holding U.K. government bonds
b. The Japanese automobile industry
c. Mexican tourists planning a trip to the United States
d. A British firm trying to purchase property in the United States

Answer 1

Answer:

A. If the US dollars appreciated, individuals holding funds in UK currency will receive less amount in dollars as the exchange rate goes in favor of united states. Hence, they will be unhappy.

B. Happy, since the importing of goods from Japan will become cheaper leading to extra demand in market.

C. Unhappy, since the tourists will now need to pay extra money to come to the United states.

D. Unhappy, since the firm now has to pay extra pounds or euros due to dollars appreciation.