Business organisation and environment

Table of Contents

1. Topic pack - introduction
2. 1.1 Nature of business activity - notes
3. 1.1 Nature of business activity - questions
4. 1.2 Types of organisation - notes
5. 1.2 Types of organisation - questions
6. 1.3 Organisational objectives - notes
7. 1.3 Organisational objectives - questions
8. 1.4 Stakeholders - notes
9. 1.4 Stakeholders - questions
10. 1.5 External environment - notes
11. 1.5 External environment - questions
    1. The social environment - self-test
    2. The economic environment - self-test
    3. Technological change - short answer questions
    4. Technological change - case study
    5. Economic growth - short answer questions
    6. Inflation - short answer questions
    7. Exchange rates - short answer questions
    8. Exchange rates - Case Study
    9. Unemployment - short answer questions
    10. Interest rates - short answer questions
    11. Apple's iPad goes global
    12. Anti-monopoly probe by EU
    13. Oiling the wheels of industry?
    14. Japan cuts Interest rates
    15. China relaxes controls on Yuan
    16. External influences and market structure
12. 1.5 External environment - simulations and activities
13. 1.6 Organisational planning tools - notes
14. 1.6 Growth and evolution - notes
15. 1.7 Growth and evolution - questions
16. 1.7 Growth and evolution - simulations and activities
17. 1.6 Change (HL only) - notes
18. 1.9 Globalisation - notes
19. 1.9 Globalisation - questions
20. Print View

Exchange rates - Case Study

Investors embraced the perceived safety of the American dollar as the financial crisis shook the world in 2008. But since March 2009, as stock markets rebounded and investors again rolled the dice in riskier markets, the dollar has suffered, raising questions about whether its status as a go-to currency for trade and investment would fade in the coming years.

Washington officially supports a strong dollar, but a weaker dollar, while raising the prices of imported goods like oil, also helps give American manufacturers an edge in foreign markets by decreasing the relative price of their products. Officials in the Obama White House have done little to curb the dollar's more recent slide.

As budget deficits reached an estimated $1.6 trillion for 2009 and the government printed money to finance its financial rescue programs, other countries and investors started to get nervous. China, which holds the most dollar reserves, raised concerns about rising American debt, and some of its top officials floated proposals that would replace the dollar as the world's reserve currency. Global investors began putting more of their money into Euros. And in October, rumours surfaced that the oil-producing countries would stop pricing oil in dollars, though that speculation was quickly batted down by governments in the Middle East and Russia.

The American economy is still the largest in the world, and with so many trillions of dollars being held by foreign governments, the dollar's dominance in world markets is not likely to fade quickly. Still, worries abound.

Adapted from: New York Times
Oct. 12, 2009

Question 1

Define the term 'exchange rate'.

Question 2

Analyse the effects of a falling dollar on the US economy?

Question 3

Discuss how falls in the value of the US dollar will affect US businesses that trade with the European Union.