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26-07-2013, 10:30 AM
An honorable member of the Coffee Shop Has Just Posted the Following:
Is Sillypore better off with a strong currency?
Does it really benefits the lives of local Sillyporens if our currency is strong?
Most countries, if given a choice, would actually opt for a weaker, rather than a stronger currency. Sounds absurd, right?
Do you agree with the following conclusion?
To summarize:
Strong currency
Advantages:
Results in cheaper imported goods, thus exerting a downward pressure on imported inflation;
Forces domestic producers to improve their efficiency in order to compete in the international market.
Disadvantages:
Makes exports uncompetitive in the international market, thus hurting export industries;
Aggravates unemployment problems;
Induces consumers to buy more imported goods, thereby:
hurting domestic industries; and
causing higher currency outflow.
Weak currency
Advantages:
Makes exports cheaper, resulting in:
higher export volume and lower production costs, due to economy of scale;
improved balance of trade; and
higher employment level;
Discourages consumers from buying imported goods, thereby:
benefitting domestic industries; and
resulting in lower currency outflow.
Disadvantages:
Causes imported inflation, i.e. products using imported content will become expensive, thus affecting general price levels.
Currency undervaluation has been said to be a “beggar-thy-neighbor” policy because it:
improves domestic trade balance; and
adversely affects the trade balances of other countries.
Conversely, currency overvaluation is said to be a “beggar-thyself” policy.
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?158097-Strong-or-Weak-Currency-For-Sillypore&goto=newpost).
Is Sillypore better off with a strong currency?
Does it really benefits the lives of local Sillyporens if our currency is strong?
Most countries, if given a choice, would actually opt for a weaker, rather than a stronger currency. Sounds absurd, right?
Do you agree with the following conclusion?
To summarize:
Strong currency
Advantages:
Results in cheaper imported goods, thus exerting a downward pressure on imported inflation;
Forces domestic producers to improve their efficiency in order to compete in the international market.
Disadvantages:
Makes exports uncompetitive in the international market, thus hurting export industries;
Aggravates unemployment problems;
Induces consumers to buy more imported goods, thereby:
hurting domestic industries; and
causing higher currency outflow.
Weak currency
Advantages:
Makes exports cheaper, resulting in:
higher export volume and lower production costs, due to economy of scale;
improved balance of trade; and
higher employment level;
Discourages consumers from buying imported goods, thereby:
benefitting domestic industries; and
resulting in lower currency outflow.
Disadvantages:
Causes imported inflation, i.e. products using imported content will become expensive, thus affecting general price levels.
Currency undervaluation has been said to be a “beggar-thy-neighbor” policy because it:
improves domestic trade balance; and
adversely affects the trade balances of other countries.
Conversely, currency overvaluation is said to be a “beggar-thyself” policy.
Click here to view the whole thread at www.sammyboy.com (http://www.sammyboy.com/showthread.php?158097-Strong-or-Weak-Currency-For-Sillypore&goto=newpost).