Thursday, October 28, 2010
Investment in Foreign Markets
Thew global investment in to equity markets have risen in "emerging" markets. Investment is quickly moving away from United States, and European stock to emerging countries. If this trend continues there is an expectation of the value of the U.S. dollar to decrease. Should we be concerned about this shift or will the decreased value help our economy and our large deficit? Obviously no individual wants to see the value of their money decrease but this could be a benefit both to the deficit and domestic companies.
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Individuals may not want to see the value of their currency decrease since it affects their purchasing power but that just makes American goods more attractive in the international market and would help increase exports. So in the long-run there would be greater profits for firms and they can invest it. A depreciation of the dollar is good for the US economy.
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