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Bookmark or Share- Purchasing Power Definition & Example - InvestingAnswersLet's assume $1 bought 1.50 gallons of gas in 1987. Today, $1 buys about half a gallon. This is an example of the change in the purchasing power of the American dollar. Two general theories explain decreases in purchasing power. The first, the demand-pull theory, says prices increase when demand for goods and services exceeds their supply.
- Devaluation Definition & Example - InvestingAnswersA currency 's devaluation is the result of a nation's monetary policy. A central bank can make the conscious effort to make its currency less valuable. If Country XYZ's currency is set at a fixed exchange rate of 2:1 to the U.S. dollar and, due to a weak economy, XYZ cannot afford to pay the interest rate on its debt outstanding, XYZ may ...
- Weak Currency Definition & Example - InvestingAnswersFor example, if you needed 100 dollar bills to buy a gold coin yesterday, but today you need 110 dollar bills, the dollar is a weakening currency. Currency value is relative. A country with a strong economy tends to have a strong currency. It helps to remember that currency is a commodity, like orange juice or pork bellies.
- With the Market in Chaos, What Should Investors Do Now? - InvestingAnswersMake no mistake: it's bleak out there. But a host of positives are also in place, led by corporate profits, the health of the banking system, rising exports (thanks to a weak dollar) and still-low interest rates. As this market meltdown is of a different stripe than the market plunge of 2008/2009, then so is the game plan.
- Weak Dollar Definition & Example - InvestingAnswersFor example, if you needed $100 to buy a gold coin yesterday, but today you need $110, the weakening dollar is causing you to pay more for the same amount of gold. Currency value is relative. The dollar can be weak relative to one foreign currency, but strong relative to another country's currency. It helps to remember that currency is a ...
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