Monetary policy in the US, especially the desire to increase interest rates at some time soon, will have international repercussions. One of these will be to strengthen an already strong dollar. Please discuss the consequences of such an interest rate rise on the US economy, taking into consideration the global ramifications.

Answer:

Rise in interest rate will increase the value of the dollar, it will appreciate the exchange rate of dollars against all the major currencies in the world. It will cause:
1.   Imports in the US to be cheaper as they have to pay less dollars for their imports
2.   US Export companies will suffer due to the high value of dollars and their price advantage will be eradicated.
3.   In a global context, exporters of the countries with cheaper currencies will be benefitted as they can lower the price in the international market.
4.   Those US MNC will be in loss who conduct their foreign operations in other currencies. Earning reflected in US dollar will show relatively smaller earning due to strong dollar value.
5.   High interest rates will also increase the supply of the loanable funds in the market.
6.    Funds will also come from the overseas nations to the USA.