When US troops leave iraq. Will the dolar get stronger?
Answer:
No unless interest rates changed or our trade balance changed.
Stronger against what?
It is doubtful...there will be less military spending so support industries will lay people off.
The troops will be back and be demanding jobs.
The protesters will have nothing to protest about so they too will be looking for work.
That's a good question. I think it will.
But I think the question is designed to make you think about the consequences of various economic things, so just make something up and see how far you go.
Politically, I could see oil prices falling and hence our demand for foreign goods falling just a bit. However, the war might continue if Saudia Arabia fullfils its promise to back the sunnis. Then, oil prices might rise. But I think the sooner we get out of there, the better things will be, after a brief time of chaos as a new government takes over. So I think long term there will be lower oil prices.
Even though theoretically, inflation is a general rise in prices, oil is often though to cause inflation, even though it is only a single good. So inflation will fall, and our demand for exports will fall or may not rise as much. Now that I think about, falling oil prices will really stimulate income, which will stimulate imports which will put more pressure on lowering the dollar. So again, I am not sure.
It's not related.
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