Question Details

Why does the exchange rate not always adjust to a current account 



1.	Exchange Rate Effects on Trade. 

a. 	Explain why a stronger dollar could enlarge the U.S. balance of trade deficit. Explain why a weaker dollar could affect the U.S. balance of trade deficit. 
b.	It is sometimes suggested that a floating exchange rate will adjust to reduce or eliminate any current account deficit.  Explain why this adjustment would occur. 
b.	Why does the exchange rate not always adjust to a current account deficit?

2.	Effects of Tariffs. Assume a simple world in which the U.S. exports soft drinks and beer to France and imports wine from France. If the U.S. imposes large tariffs on the French wine, explain the likely impact on the values of the U.S. beverage firms, U.S. wine producers, the French beverage firms, and the French wine producers. 




Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help