Which of the following businesses would prefer a weak U.S. dollar to a strong one?
A. A Saudi Arabian company that exports oil to the United States
B. An American company that imports clothing from Italy
C. A Turkish company that imports microchips from the United States
D. A Canadian company that exports lumber to the United States
I think the answer is D.
A weak dollar makes imported goods more expensive in the U.S., so either A or D would be correct. What does your text say?
It didn't say anything about this topic.
Read this to better understand this topic:
http://www.infoplease.com/cig/economics/dollar-us-economy.html
You are correct, the answer is D.
To determine which of the businesses would prefer a weak U.S. dollar, we need to understand how currency exchange rates affect international trade.
A weak U.S. dollar means that the value of the U.S. dollar is lower compared to other currencies. In this case, it means that the U.S. dollar has less purchasing power.
Now let's analyze the options:
A. A Saudi Arabian company that exports oil to the United States:
A weak U.S. dollar would mean that the Saudi Arabian company receives fewer U.S. dollars for every barrel of oil exported. This would decrease their revenue because the value of those dollars would be less in Saudi Arabia. Therefore, a weak U.S. dollar is not preferred.
B. An American company that imports clothing from Italy:
A weak U.S. dollar would mean that the American company would need to exchange more U.S. dollars to purchase the same amount of clothing. This would increase their costs of importing and reduce their profit margins. Therefore, a weak U.S. dollar is not preferred.
C. A Turkish company that imports microchips from the United States:
Similar to option B, a weak U.S. dollar would increase the costs for the Turkish company to import microchips, as they would need to exchange more Turkish Lira to obtain the necessary dollars. Therefore, a weak U.S. dollar is not preferred.
D. A Canadian company that exports lumber to the United States:
A weak U.S. dollar would be beneficial for the Canadian company that exports lumber to the United States. When the U.S. dollar is weaker, Canadian lumber becomes relatively cheaper for U.S. buyers, which can lead to increased demand and higher revenue for the Canadian company. Therefore, a weak U.S. dollar is preferred in this case.
In conclusion, among the given options, the Canadian company (option D) would prefer a weak U.S. dollar to a strong one.