The value of the US dollar - Assignment Example

The U.S. Dollar al Affiliation: The Value of the US Dollar The must work to ensure do not become bankrupt. For countries to stay under the debt ceiling, they will need an instant balanced budget to ensure that additional debts do not accrue. Additionally, to finance its spending the government does not necessarily need taxes and bond sales, but instead it offers dollars. The value of the US dollar has gained value because the government of US levies $3 trillion annually in tax liability. In addition, it accepts the U.S. dollars only in payment that it only issues.

There is a threat of penalties if one does not settle up using dollars. The value of the U.S dollar to rise or fall depends on how many dollars are printed by the state treasury department. The more money they print out, the less its worth. Also, the dollar’s value rises based on the demands in relation to other currencies (Goldberg & Tille, 2008).The U.S dollar demand is mostly from the people who buy U.S. exported goods. Government issues bonds, tourists, people who purchase real estates and the U.

S corporations bonds and stocks. The Federal Reserve and the central bank supply the dollar. When we buy goods from Germany, the demand for the euro rises (Goldberg & Tille, 2008). This is because when they receive cash we have less money. Floating exchange rate arises when the state allows the exchange rates to affirm by market forces and no attempts to power the exchange rate. The Falling of the U.S dollar makes travelling expenses to rise. People will need to spend more dollars to purchase foreign currency.

A cheap dollar will lead to cheap exports abroad, and imports will become more expensive.ReferenceGoldberg, L. S., & Tille, C. (2008). Macroeconomic Interdependence and the International Role of the Dollar. Federal Reserve Bank of New York, Staff Report no. 316.