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The dollar is stronger, as in, you need fewer dollars to buy something. So if the volume of goods and services stayed the same, their dollar value would be exp
by danuker 4y ago
The dollar is stronger, as in, you need fewer dollars to buy something.
So if the volume of goods and services stayed the same, their dollar value would be expressed in a smaller number.
- deleted 4y ago[deleted]
- blindriver 4y agoYour conclusion is completely backwards. The dollar is stronger, which means that imports are cheaper and exports to other countries are more expensive for those that are buying American goods. This leads to a larger trade deficit.
- nwah1 4y agoYou are both right. With unchanged demand for imports, then the total value of imports in USD would be the same, but a stronger dollar would affect the relative demand for imports vs domestic commodities in reality given basic supply and demand assumptions. But the point is still correct that you would have to adjust for the relative change in currency prices to know whether the amount of stuff we are taking in from abroad has really changed or not.
- danuker 4y agoThere are two ways to measure the "strength" of the dollar. One is comparing it to goods and services (consumer prices). The other is comparing it to other currencies (DXY). I guess these two factors have varying influence on imports and exports, but I suspect DXY is the more relevant in this case. So, I suspect my focus has been wrongly on the money supply, as opposed to the supply relative to other currencies, with DXY having almost reached the 2002 maximum in October 2022. So, I thank you for insisting.
- HPsquared 4y agoLarger trade deficit in terms of dollars, or in terms of "stuff"?