How are consumers, firms, and investors affected when the U.S. dollar is “weak?” Who benefits and who is harmed?

What will be an ideal response?

When the dollar is “weak,” this means that a dollar will buy relatively few units of foreign currencies. At the same time, foreign currencies are relatively “strong” compared to the U.S. dollar. This makes U.S. exports of goods and services relatively cheaper for foreigners to buy, which benefits U.S. firms that export abroad and U.S. tourist attractions that cater to foreign visitors. A weak dollar also makes it easier for foreign investors to invest in the United States. However, a weak dollar makes foreign imports relatively more expensive to U.S. consumers. For example, U.S. tourists find relatively higher prices when traveling abroad. A weak dollar also makes it more difficult for U.S. investors to invest in foreign assets.