economics

How do the drop in sales such as a new homes effect the value of the U.S. dollar relative to other currencies?

  1. 👍 0
  2. 👎 0
  3. 👁 40
asked by Laz
  1. Lets start with am international supply and demand for US dollars, expressed in terms of of some foreign currency such as Euros.

    The demand for US dollars comes from foreigners who want to buy US goods. An increase in the demand for US goods would lead to an increase in the demand for dollars. However, I think we can safely assume foreigners don't want to purchase new homes in the US.

    One source supply of dollars comes from investors (foreign and domestic) who are looking for some return on their money. One source of investment is financing new homes purchases.

    Now then, if new home sales falls, then the financing of new homes must also fall. Investers, looking for alternative investments, sell dollars for Euros. So, the supply of dollars increases. Which means the price of dollars in terms of Euros falls. Soooooo, I would assert that a drop in new home sales in the US would cause the value of the US dollar to drop.

    Whew. I hope this helps.

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. Engineering

    We estimate that today c.89% of homes can readily get a 2Mbps (or higher) broadband service from cable, ADSL or wireless means. This means that c.11%, or about 2.75m, homes cannot readily get a 2 Mbps (or higher) broadband service

    asked by SRay on May 23, 2010
  2. finance

    Winnebagel Corp. currently sells 29,400 motor homes per year at $44,100 each, and 11,760 luxury motor coaches per year at $83,300 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to

    asked by angiza on April 16, 2012
  3. Finance

    Winnebagel Corp. currently sells 33,000 motor homes per year at $49,500 each, and 13,200 luxury motor coaches per year at $93,500 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to

    asked by William on February 4, 2012
  4. it

    Explain how you would create the users for the sales organization unit and how to set up work groups in this particular situation. Keep in mind that you may have to name certain applications and allowable tasks for each individual

    asked by kim on November 13, 2008
  5. Statistics

    1. A company decides to add a new program that prepares randomly selected sales personnel to increase their number of sales per month. The mean number of sales per month for the overall population of sales people at this national

    asked by daniel on February 19, 2014
  6. statistics

    a company decides to add a new program that prepares randomly selected sales personnel to increase their number of sales per month. The mean number of sales per month for the overall popualtion of sales people at this national

    asked by Anonymous on May 20, 2013
  7. Psychology

    1. A company decides to add a new program that prepares randomly selected sales personnel to increase their number of sales per month. The mean number of sales per month for the overall population of sales people at this national

    asked by Sandy on October 5, 2013
  8. social science

    What should America Federal Reserve do to preserve the value of the U.S. dollar when there is a situation as a drop in new home sales,with the rise in unsold new property, and a drop in consumers buying goods and services?

    asked by Julie on April 15, 2008
  9. Algebra

    This year, Village Realty sold 280 homes. Last year they sold 350 homes. If their sales decrease by the same percent next year, how many homes can Village Realty expect to sell next year?

    asked by Anonymous on November 9, 2017
  10. managerial economics

    Cypress River Landscape Supply is a large wholesale supplier of landscaping materials in Georgia. Cypress River’s sales vary seasonally; sales tend to be higher in the spring months than in other months. a. Suppose Cypress River

    asked by air on June 21, 2013

More Similar Questions