please help with economics work 10 pts?

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vasel2007

New member
The answer is that the dinar will depreciate because the dollar will become stronger.
The rationale is that when exports fall, holding other factors constant (holding imports Constant), The circulation of the dollar in the Economy will also fall and remeber Kuwait needs the dollar to purchase good abroad. And now the point is that there are few dollars in the Economy and Many dinar. The demand for a dollar will go up and that of the dinar will fall hence depreciation of the loca;l currency.
 
Suppose that the following two events take place in the market for Kuwait's currency the dinar; the us demand oil, Kuwait's main export good declines and market interest rates on financial assests denominated in dinar decrease relative to us interest rates what happens to the dollar price of the dinar? does the dinar appreciate or depreciate relative to the dollar
 
The answer is that the dinar will depreciate because the dollar will become stronger.
The rationale is that when exports fall, holding other factors constant (holding imports Constant), The circulation of the dollar in the Economy will also fall and remeber Kuwait needs the dollar to purchase good abroad. And now the point is that there are few dollars in the Economy and Many dinar. The demand for a dollar will go up and that of the dinar will fall hence depreciation of the loca;l currency.
 
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