The decline of the dollar relative to the world's major currencies has
             caused concern among many executives, academics and policy planners in this
             country and abroad. The article from which this paper is based on is from
             the on-line version of BusinessWeek magazine titled, "The Falling Dollar's
             World of Hurt," dated January 26, 2004. The subtitle of the article,
             written by David Fairlamb, states that, "A continued decline would mean bad
             news for just about every part of the globe, and that has World Economic
             Forum attendees worried." The article follows the discussion that took
             place at the World Economic Forum's annual meeting in Davos, Switzerland at
             the end of January. The assumption of those at this meeting was that even
             though the U.S. economy continues to show strong growth, the dollar would
             continue to fall, especially against the Euro. A further assumption at the
             conference was that the dollar would continue to lose another 10% to 20%
             value against the Euro throughout the rest of this year, where many have
             pegged it at $1.40 to $1.50 per 1.00 by early 2005. The large drop of the
             dollar forecast for the rest of this year would come after the dollar has
             already lost 35% of its value against the euro since early 2002.
             The supply and demand dynamics of the dollar verses other currencies,
             especially the euro, is in part what is driving the dollar down. Like most
             developed economies in the world today, the United States and the countries
             of the European Union utilize a floating exchange rate. A floating
             exchange rate means that a country's central bank allows the exchange rate
             to adjust to changing economic conditions. According to the Mundell-
             Fleming Model, (Mankiw 1992) if a country's domestic interest rate is less
             then the world's interest rate, the net effect is investors look elsewhere
             for investment opportunities for their assets. In this case, the United
             ...