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Your Friend States That (I)a Strong Dollar (Appreciation of the Dollar)is

question 84

Essay

Your friend states that (i)a strong dollar (appreciation of the dollar)is a sign of a healthy economy and that (ii)a weak dollar (depreciation of the dollar)is a sign of a weak economy. Assuming that other factors that could affect the exchange rate do not change, explain that the opposite is true when the following are considered:
a.the effect of rapidly falling incomes in Australia during a recession
b.the effect of rapidly rising incomes in Australia during an economic expansion
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Definitions:

Vasodilatation

The widening of blood vessels, which decreases blood pressure and increases blood flow to certain areas of the body.

Piloerection

The involuntary erection or standing up of hairs on the skin due to cold, fear, or emotional stimuli, commonly known as goosebumps.

Perspiration

Perspiration, also known as sweating, is the release of a salty fluid from the body's sweat glands as part of the process of regulating body temperature.

Cold Application

A method used to reduce swelling and pain by applying ice or cold packs to the affected area.

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