The depreciation of money, also known as currency depreciation, occurs when a country's currency decreases in value. For example, if the US dollar depreciated, then it lost some of its value compared to the currency of another country.
Depreciation of the US dollar will have a ripple effect. In other words, it will impact other aspects of the economy. For example, depreciation of the dollar will:
Increase the price of products being imported into the US from other countries.
Decrease the price of products being exported from the US to other countries.
Impact the amount being imported and exported from the US (i.e., fewer imports and greater exports).
Lead to an increase in real GDP if US-based production increases to replace products that may have otherwise been imported.
Cause the currencies of other countries to fluctuate in tandem with the decreasing value of the US dollar if these counties try to keep their currencies stable relative to the US.
Friday, May 15, 2015
Depreciation of the US dollar will
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