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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

If the United States imports more goods from abroad than it exports, foreigners will tend to have a surplus of U.S. dollars. What will this do to the value of the dollar with respect to foreign currencies? What is the corresponding: effect on foreign investments in the United States?

Summary Introduction

To explain: The effect on the currency value and foreign investment, if the import is more than the export.

Introduction:

Import:

When a country purchases goods and services from the other country are called import.

The Import was made by the country at that time when the country had a shortage of the goods and services domestically.

Export:

When a country sells goods and services to the other country, it is called export. Export of goods and services makes the foreign surplus of the country.

Explanation
  • If the US imports goods and services more from the abroad than export, the value of the currency will decrease.
  • If the value of the dollar decreases, then the foreign investment will increase in the US...

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