Yellen: Value of Dollar Important Influence on Economy

The video discusses the influence of the dollar's value on the economy, highlighting its role in trade deficits and the Federal Reserve's economic forecasts. It explains how interest rate divergences across countries impact the dollar, with the US economy's strong recovery leading to a stronger dollar. This affects global trade by making US goods less competitive. Recent trends show further dollar appreciation due to market expectations and fiscal policies, emphasizing the complex factors influencing trade deficits.

What role does the Federal Reserve play in relation to the value of the dollar?

• It sets the dollar's value through monetary policy.

• It considers the dollar's value when forecasting the economy.

• It ignores the dollar's value completely.

• It directly targets the dollar's value.

How do divergences in interest rates across countries affect the dollar?

• They have no impact on the dollar.

• They can lead to a stronger dollar.

• They cause the dollar to weaken.

• They stabilize the dollar's value.

What has contributed to the recent strengthening of the US dollar?

• A decline in global trade.

• A stronger and faster recovery of the US economy.

• A decrease in US interest rates.

• A weaker US economy compared to other nations.

What is one consequence of a stronger US dollar on global markets?

• Imports become more expensive.

• US exports increase.

• US goods become more competitive.

• US goods become less competitive.

Besides trade policies, what other factor is important in shaping a country's trade deficit?

• The country's climate.

• The level of government debt.

• The value of the dollar.

• The country's population size.