How does a low rate of inflation affect the economy?

How does a country's exchange rate affect it's economy?

• I want to know how the exchange rate affect the economy of a country. 1) How does the exchange rates affect the economy of a country? 2) Why is it important? 3) If the price of a dollar rises against the local currency, what does that mean and how does it affect the economy of that country? And also viceversa? 4) What are the negative effects the exchange rate of a dollar could give if the price of it(dollar) rises? >> Thank you a lot for investing some of your valuable time in reading this question of mine. Thank you also for the ones who've answered to this question. :] May God bless you. :]

• Answer:

  1.. When the Euro was higher than the dollar then the price of US goods was cheap and exports increased, fueling production in the US. When it was low, vice versa. 2. It's important if you depend on exports to fuel your economy, and in this age, everyone does. 3. see #1. 4. When the dollar is strong then people would rather buy from elsewhere, but people in the US have more purchasing power and tend to buy more foreign stuff. Exports go down but imports go up. Businesses in other countries thrive but not so much in the US due to exports.