Question

How does the value of the dollar affect the competitiveness of American businesses?

Answer 1

The value of dollar affects the competitiveness of American businesses by impacting the price of US-made goods in terms of foriegn currency.

When dollar depreciates then it means that more dollars can now be purchased with one unit of foriegn currency. This lowers the price of US-made goods in terms of foriegn currency and thus made them cheaper for foriegn consumers thereby enhancing the demand for US-made goods as well as competitiveness of American businesses.

On the other hand, when dollar appreciates then it means that less dollars can now be purchased with one unit of foriegn currency. This raises the price of US-made goods in terms of foriegn currency and thus made them expensive for foriegn consumers thereby reducing the demand for US-made goods as well as competitiveness of American businesses.