I. INTRODUCTION
Objective
The general objectives of this study are to describe recent trade problems and examine why these problems are related to, and affected by exchange rates. The study first examines the exchange rate and how it is determined. The study will explore, in detail, the agencies that determine these rates. This study will also present the pros and cons of different prices of goods and services in different countries. Specifically, this paper:
(1) defines recent trade problems and how they are affected by the exchange rate;
(2) describes the steps taken within the agencies that determine the exchange
rates;
(3) examines the impact of these rates, both good and bad;
(4) analyzes the costs of similar goods in the U.S. and in foreign markets;
(5) discusses the pros and cons of the exchange rate and how it affects trade;
(6) examines various exchange rate systems: floating, fixed, and dirty floating.
Limitations of the Study
The topics of exchange rate and trade both have a variety of factors that cause changes. As with any study that attempts to explore current developments in the economy, it is hard to keep information current. It is also virtually impossible to report on the status of every single government that is involved in the exchange market. One of the limitations of this study is to report on up-to-date values of currency while choosing a sample of governments that accurately represent the world economy. Therefore, the solution was to use stastical figures from magazine articles and books that were written within the previous year. Also, the countries that were chosen to be studied are considered to play a significant role in the exchange rate market.
Plan of the Paper
This study first examines the relationship between the exchange rate and trade. This examination includes a definition of the exchange rate, an explanation of how the rate is determined, and a detailed description of the agencies involved in determining the exchange rate, including the United States Treasury and the Federal Reserve Bank (the
Fed). The next section defines and evaluates three different exchange rate systems - the
fixed, the floating and the dirty floating. The third section defines trade problems, how
they are affected by the exchange rate, and also how trade is affected by the ex...
... middle of paper ...
...e have been system changes in the United States, from the Bretton Woods to the present floating rate; and there are differing systems that are implemented
throughtout the world, the fact remains that the exchange rate is the basis for an amazing amount of financial decisions - including trade. Economists will argue over which system is best, but there is not doubt that whatever system is chosen will still have to be able to withstand the constant fluctuations in supply and demand. In the past few years, the world has seen supposed stable markets plummet after an overvaluation of their currency. Brazil and Russia are just a few of the countries that were affected - Mexico, Asia,Thailand, Malaysia, the Philippines, and Indonesia are other countries who have had to overhaul their exchange system.
Right now the dollar remains strong. However, the plight of these countries not only
creates an internal crisis, but it creates a small amount of panic throughout the world.
Investors who are cautious become concerned and quickly shift their investments. This
movement creates a domino affect through the exchange rate, interest rates, and trade
balances between countries.
... against him. With regard to the second objection, Aristotle can begin by accepting that whereas it is indeed true that the parts prior to the whole or the polis - the single associations, respectively - do not contain the virtue for the achievement of eudaimonia in themselves alone, it is through the conjunction of them all that the capacity for this virtue emerges. Indeed, the parts of the city-state are not to be taken distinctively. For instance, whereas five separate individuals alone may not have the capacity to each lift a 900 lbs piano, the five together, nonetheless, can be said to be able to accomplish this. Similarly, it is the city-state with all of its parts that can achieve the good life. In any case, it remains that humankind is essentially political since it fulfills the function of reason, and this function is best performed under the city-state.
Meade (1988) stated that, because of the exchange rate rapid decline so much since early 1985 in the US and because the monthly trade statistics has been examined so thoroughly for any sign of a turnaround in the nominal trade balance, the J-curve phenomenon has received much attention. The statistics often implies that the negative effect of depreciation is reflected in the J-curve as the continuation of nominal trade deficit. Between early 1985 and 1988, the exchange value of US dollar in terms of currencies of other countries, registered a sizeable depreciation. The deficits recorded in the trade account were mirrored in the current account deficit. Meade depicted the significance of the exchange rate to the trade account as well as current account through the use of the J-curve highlighting that the phenomenon is used as a long-term goal to curb the deficits, however in the short-run, depreciation will increase the nominal deficits accumulated by a country.
Client attempted to call Dan’s home but his wife would pick up and she would hang up. She would constantly call his job and he would ignore her calls. Client also that Dan had moved to the suburbs once she notified him that she was pregnant with their child. When she first notified him about being pregnant, he was under the impression that she would abort the child but she was not going to do that because she loved him and she was going to love this child as well. She made c...
The real exchange rate tells us the rate at which we can trade the goods of one country for goods from other countries. The real exchange rate some- times referred to as the terms of trade. To view the exchange rate relationship in real terms using the nominal exchange rate, can be taken samples h a goods produced in some countries, such as cars. Suppose the price of the car with 25,000 dollars, while the price of Japanese cars is 4,000,000 yen . To compare the prices of both cars , we have to transform them into a common currency. If one dollar worth of 80 yen , the price of cars Americans to 80 x 25,000, or 2,000,000 yen. By comparing the price of an American car (2,000,000 yen) and the price of Japanese cars (4,000,000 yen), it can be concluded that the price of the American car is half the price of Japanese cars . In other words, pad a price effect we can swap two American cars to get a Japanese car . Peng count can be written as
By 2015, Canada is the world 's eleventh-largest economy with a normal GDP close to US $1.79 trillion. High-resources and trade-depended are the major factors in Canada’s economy. Canada had a good performance in stabilizing economy growth. Canada adopted a floating exchange rate for 42 out of the last 50 years. (6)During the past several years, the topic of Canadian Government is that if they should continue a floating exchange rate or retook a fixed exchange rate.
Changes in exchange rates that veer from the PPP , but also at the same time influence the path of a country's inflation. When we have high inflation our dollar it causes everything to become more expensive which in fact could take down companies and the need for jobs become more severe.
Drab,B.(2005) Deterniments of Nominal Exchange Rates, Unpublished paper, International Financial Management, Harvard Business School, U.S.
Humanistic Theory is based on the ability for individuals to be able to separately diverse with our own prospective on life. Maslow’s theory speaks to the potential and to positive outcome of human motivation and believes that every individual can and will strives to be more.
The massive increase in the Chinese trading relations was fueled by the United States in the year 1979 through the normal trade relations between the two countries. In addition, the Chinese non-concession to the World Trade Organization (WTO) in the year 2001 also facilitated its trading activities with different countries including the United States (Kaplan, 57). However, trading relations with the Chinese have been uneasy resulting from the massive trade imbalances in the recent past, which grows exponentially. The protectionist policies of the United States especially in Washington and Beijing have been putting pressure on the Chinese to revalue their currency as well as protecting it from counterfeits, which may be of adverse effects to the trading relations. This paper gives a comprehensive discussion on the foreign trade relations with china. It further gives an elaborate discussion on the impacts of foreign tr...
You can say that overuse in texting is determination the way teens, students write formally in the classroom. Teens that spend most of their eyes on their phone has already created their own texting style. Now I am able to answer the question, how does texting affect teen literacy? Texting affects teen literacy because, text messaging does affect our grammar because, teens text like for example; “ttyl”, “gtg”, “wyd”. They find an easy way of texting rather than using the correct way. In order to get what they want done, we wanted to see and learn about the damage that texting can cause on teens and we did learn, we learned that it can affect our grammar, grades, and even your future in trying to get a job, your skills in so much more. I wanted to inform the teens about the damage that texting in short terms can do to you. Encourage them not to write in short term because, they are too
Abraham Maslow adopted the theory, and it was focused on discussing the development of professional organizations that are devoted to a more humanistic psychology. There are important topics that dominate the theory such as creativity, self-actualization and individuality as central themes to the theory. Humanistic approach is paramount and has played a critical role in ensuring understanding and new ways of thinking concerning mental
To put it simply, the exchange rate is a price. As with any other market, price is determined by supply and demand. Whenever they are not equivalent, the exchange rate would change. However, the reality comes to be far more complicated.
Self-actualization is an idea originating from the Humanistic psychological theory and particularly created by Abraham Maslow. The humanistic school of thought in psychology is the third force in psychology that attempts to regain the self, supporting that individuals do have free will and has the power to change for the better. Humanistic psychology was developed as a response to psychoanalysis and behaviorism focusing on individuality, personal growth and the concept of self-actualization. While early schools of thought were mostly concentrated on abnormal human behavior, humanistic psychology is different because of its emphasis on helping individuals achieve and fulfill their potential. The two main contributors to this school of thought
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Daily in the USA about 38 million banknotes of various face value for total amount about 541 million dollars are issued (Facts about USA money).Dollars involve deep consequences both for the USA, and for other countries. Increase of its course relatively reduces the volume of export revenue in dollars, quite often involves more considerable, than change of an exchange rate, falling of the world prices, especially on raw materials. On the contrary, decrease in a dollar rate serves as the powerful tool promoting growth of the American export and a pushing off of competitors of the USA in foreign markets. At the same time import to the USA owing to effect of a rise in prices restrains. Thus, for the USA changes in the exchange rate of dollar anyway bring benefits and advantages.Reduction of leading positions of the USA in world economy is assisted by the international role of dollar which remains the main reserve and settlement means in world monetary system. Foreign currency reserves of the central banks of other countries for 61% consist of dollars, nearly 2/3 calculations in world trade are carried out in dollars; the dollar serves as a measure of value of many important goods (for example: oil) in the world market; in dollars 3/4 international bank crediting is made (Aleksandr Popov). Changes in the exchange rate of dollar involve deep consequences both for the USA, and for other countries. Increase of its course relatively reduces the volume of export revenue in dollars, quite often involves more considerable, than change of an exchange rate, falling of the world prices, especially on raw materials. On the contrary, decrease in a dollar rate serves as the powerful tool promoting growth of the American export and a pushing off...