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Explain how an appreciation of the US$ can be expected to impact economic growth, interest rates,...

Explain how an appreciation of the US$ can be expected to impact economic growth, interest rates, and the stock market in the US.

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Answer #1

Appreciation of US dollars leads is caused because investors pump in greater money into economy as interest rates are comparatively higher. Higher foreign institutional investment thus causes stock prices to rise as demand for domestic companies in US rises.

However higher interest rstes lead to lower liquidity into market and thus consumption and aggregate demand decrease causing economic growth to decline.

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