Siyu guoEcon 13102/04/18 US Economy and US Dollar as an investmentThe value of dollar is experiencing major changes recently which drawn my attention.In this essay, I would like to talk about US dollar and US Economy as a whole, also sharing ideas if investors should buy this currency now. Gross domestic product is the best way to measure a country's economy. For the past fourth quarter of 2017, real gross domestic product increased at an annual rate of 2.6 that is roughly about $17.273 trillion(BEA). The increase in the real GDP reflected positive contributions from consumption, investment, export, and government spending. Although this performance is less than the 4 percent annual growth that president Trump has promised, there is still a significant increase in jobless rate that it fell to 4.2 from 4.4 in the previous month and it’s also surging consumer confidence (Trading Economics). From another perspective, Interest rate in the United was raised from precious 1.25 to 1.5 percent until Jan 1, 2018 (Trading Economics). Policy makers said inflation is rising this year and Economy is expected to further increase gradually in the federal funds rate. “In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1-1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation” (Federal Reserve/Joana Taborda). The foreign exchange rates are decreasing upon many countries. Taking china as an example,the exchange rate was falling from 6.89 in Jan, 2017 to 6.29 in Jan 2018 (FRED). The decreasing exchange rate means U.S dollar is facing depreciation.Furthermore, President Trump’s policies had to associated with this depreciation. During 2017, Trump made political changes on healthcare reform, immigration regulation, trade protection and especially tax reform. The Trump tax plan facilitate the reflow of capital of many multinational firms. For example, Apple has already flow back $38 billion as repatriation tax to American and is planning to invest for more than $300 billion in U.S for the next 5 years. Thus, depreciation of U.S dollar is helping firms to export more to increase their competitiveness and depreciation of dollar would also decrease the scale of debt. To continue the topics of exchange rate, we need to take a look at the purchasing power parity(PPP). PPP implies that the exchange rate is determined by levels of prices. For absolute PPP, exchange rate equals the level of prices across countries; and for relative PPP, changes in exchange rate equal the prices differences between two periods. When I check with the Big Mac index, I realized in January 2018, the Bigmac price for America is $5.28 and for china is ¥20.4. However, the spot exchange rate is 6.28¥／$, so dollar is overvalued by 60%(Economist.com). Also, from December 2016 to December 2017 the consumer price index CPI rose 2.1 percent for America while 1.7% for China(bls.gov). According to relative PPP, the change in exchange rate from U.S to China would be 2.1 - 1.7=0.4 percent. Even though the U.S dollar is depreciated at the moment, the Economy itself is doing well during this period due to the increase of export and increase of reflow of capital. In the long-term, I believe that the value of dollar will eventually appreciate. Thus, it is a good time now for investor to invest in dollars and make a profit in the