New answers tagged exchange-rates
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So a US consumer picks their non-car bundle of goods, $x$, with prices $p$ denominated in dollars. The price of an American car is $a$ dollars, the price of a Japanese car is $y$ yen, and the price of a dollar in yen is the exchange rate, $r$ (how many yen does a dollar buy?). If the consumer buys an American car, $z = 1$, yielding utility $u_a$ at a price ...
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It is a central bank issue.The dollar is a currency widely used around the world. It is so widely held that if the U.S would try and "Devalue its currency" to gain an economic advantage it would be nil effect because it would also bring down its own economy. China is much different in that it is a closed enough society that it can tell you what you have to ...
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