Dollar Standard

Rates of exchange and their fluctuation can have dramatic effects on price. For example, in mid-1995 the dollar was sinking in value against the Japanese yen and the United States government was threatening a trade war over the closed Japanese automobile market. A weak dollar means American goods are cheaper in countries that have a strong currency against the dollar. A strong dollar means American goods are priced higher because the foreign currency is weaker.

• More Indepth Analysis - Taken from the Federal Reserve Bank. This article discusses the strong and weak dollar and in much more detail. An excellent source.

• Links to floating, pegged and fixed currency

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