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Macro Economics Practice Exam

Michelle Singh
Michelle Singh
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Macro Economics Practice Exam
Question 1 (Essay Worth 15 points) Exchange Rates | Year | U.S. Dollar | South Korean Won |
Malaysian Ringgits | Indonesian Rupiahs | 2008 | 1 | 9,046 | 3.49 | 9,022 | 2009 | 1 | 9,046 | 3.78 |
9,087 | 2010 | 1 | 8,995 | 3.65 | 9,144 | a. Given the change in the value of the dollar between 2008
and 2009, as indicated in the table above, describe the effects this will have on United States tourism
in each of these countries. b. Explain what impact the change in the value of the dollar between
2008 and 2009 will have on the United States current account. Question 2 (Essay Worth 15 points)
Suppose the United States decides to impose a tariff on all wood products coming into the nation. a.
Using a supply ... Show more content on Helpwriting.net ...
a car that was imported from Korea wheat that was exported to Somalia a factory site purchased in
Ireland $2 million in U.S. aid to rebuild schools in Afghanistan $500 in interest earned on Swedish
bonds Question 6 (Multiple Choice Worth 2 points) Lindsay can either wash two dogs or clean four
windows in two hours. Amy can either wash two dogs or clean ten windows in two hours. Based on
this information, which of the following is true? Lindsay has an absolute advantage in washing
dogs, while Amy has an absolute advantage in cleaning windows. Lindsay has a comparative
advantage in washing dogs, while Amy has a comparative advantage in cleaning windows. Lindsay
has a comparative advantage in cleaning windows, while Amy has a comparative advantage in
washing dogs. Lindsay has a comparative advantage in the production of both goods. Amy has a
comparative advantage in the production of both goods Question 7 (Multiple Choice Worth 2 points)
| Oranges | Bananas | United States | 4 acres | 5 acres | Costa Rica | 3 acres | 2 acres | The table above
lists the number of acres it takes to produce one cargo container of oranges and one cargo container
of bananas in the United States and Costa Rica. Which of the following is true? I. The U.S. has the
comparative advantage in producing oranges. II. Costa Rica has the comparative advantage in
producing oranges. III. The U.S. has the comparative advantage in producing bananas. IV.
... Get more on HelpWriting.net ...
Macro Economics Practice Exam
Macro Economics Practice Exam
Macro Economics Practice Exam
The Future Of The Us Dollar
The Future of the US Dollar in the International Market A society based on trade was established as
early as 4000 B.C.E. (Hunt 6). However, the end of the Cold War marked the beginning of a new
stage, an economy fully supported by globalization (Gilpin 10–12). This new beginning for the
economy made the international markets the central focus of the economy. Since the gold standard
had crushed, the US dollar became the official exchange standard and also the most used currency in
the world. Currently, its status of international currency remains the same, but the international
market has changed so much that there are factors that leave its future uncertain. The role of the US
dollar as an international currency is at risk because of the ... Show more content on Helpwriting.net
...
This decrease can be due to the economic problems that the United States faced during the decade of
the 2000's, the Financial Market Crisis, and is still battling to recover from, or due to the increase of
power and popularity of other countries and their currencies, such as the countries that make up the
European Union (Goldberg). "The concept of the world money is organically linked to an
understanding of the world market as the fundamental framework of global capitalism where profit
rates are equalized and an average world market rate of profit is established" (Ivanova 51–52). The
world market became the main focus of the world's super–power countries as well as developing
countries. As Karl Marx's theory of money establishes, money is not only a measure of value or a
medium of change, when it becomes world money, it becomes "the absolute social materialization of
wealth as such (universal wealth)" (qtd. in Ivanova 51). One of the main characteristics of world
money that applies to the US dollar today is that it is a dominant currency in international financial
markets that is also used "hand–to–hand" in foreign countries (Auboin). Bitcoin was created in 2009
as an international currency to make digital transactions easier and faster(Yellin). "This
computerized money exists only as strings of digital code" ("A New Specie"). This currency is used
without intermediaries
... Get more on HelpWriting.net ...
Macro Economics Practice Exam
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The Ministry of Utmost Happiness by Arundhati Roy
 

Macro Economics Practice Exam

  • 1. Macro Economics Practice Exam Question 1 (Essay Worth 15 points) Exchange Rates | Year | U.S. Dollar | South Korean Won | Malaysian Ringgits | Indonesian Rupiahs | 2008 | 1 | 9,046 | 3.49 | 9,022 | 2009 | 1 | 9,046 | 3.78 | 9,087 | 2010 | 1 | 8,995 | 3.65 | 9,144 | a. Given the change in the value of the dollar between 2008 and 2009, as indicated in the table above, describe the effects this will have on United States tourism in each of these countries. b. Explain what impact the change in the value of the dollar between 2008 and 2009 will have on the United States current account. Question 2 (Essay Worth 15 points) Suppose the United States decides to impose a tariff on all wood products coming into the nation. a. Using a supply ... Show more content on Helpwriting.net ... a car that was imported from Korea wheat that was exported to Somalia a factory site purchased in Ireland $2 million in U.S. aid to rebuild schools in Afghanistan $500 in interest earned on Swedish bonds Question 6 (Multiple Choice Worth 2 points) Lindsay can either wash two dogs or clean four windows in two hours. Amy can either wash two dogs or clean ten windows in two hours. Based on this information, which of the following is true? Lindsay has an absolute advantage in washing dogs, while Amy has an absolute advantage in cleaning windows. Lindsay has a comparative advantage in washing dogs, while Amy has a comparative advantage in cleaning windows. Lindsay has a comparative advantage in cleaning windows, while Amy has a comparative advantage in washing dogs. Lindsay has a comparative advantage in the production of both goods. Amy has a comparative advantage in the production of both goods Question 7 (Multiple Choice Worth 2 points) | Oranges | Bananas | United States | 4 acres | 5 acres | Costa Rica | 3 acres | 2 acres | The table above lists the number of acres it takes to produce one cargo container of oranges and one cargo container of bananas in the United States and Costa Rica. Which of the following is true? I. The U.S. has the comparative advantage in producing oranges. II. Costa Rica has the comparative advantage in producing oranges. III. The U.S. has the comparative advantage in producing bananas. IV. ... Get more on HelpWriting.net ...
  • 5. The Future Of The Us Dollar The Future of the US Dollar in the International Market A society based on trade was established as early as 4000 B.C.E. (Hunt 6). However, the end of the Cold War marked the beginning of a new stage, an economy fully supported by globalization (Gilpin 10–12). This new beginning for the economy made the international markets the central focus of the economy. Since the gold standard had crushed, the US dollar became the official exchange standard and also the most used currency in the world. Currently, its status of international currency remains the same, but the international market has changed so much that there are factors that leave its future uncertain. The role of the US dollar as an international currency is at risk because of the ... Show more content on Helpwriting.net ... This decrease can be due to the economic problems that the United States faced during the decade of the 2000's, the Financial Market Crisis, and is still battling to recover from, or due to the increase of power and popularity of other countries and their currencies, such as the countries that make up the European Union (Goldberg). "The concept of the world money is organically linked to an understanding of the world market as the fundamental framework of global capitalism where profit rates are equalized and an average world market rate of profit is established" (Ivanova 51–52). The world market became the main focus of the world's super–power countries as well as developing countries. As Karl Marx's theory of money establishes, money is not only a measure of value or a medium of change, when it becomes world money, it becomes "the absolute social materialization of wealth as such (universal wealth)" (qtd. in Ivanova 51). One of the main characteristics of world money that applies to the US dollar today is that it is a dominant currency in international financial markets that is also used "hand–to–hand" in foreign countries (Auboin). Bitcoin was created in 2009 as an international currency to make digital transactions easier and faster(Yellin). "This computerized money exists only as strings of digital code" ("A New Specie"). This currency is used without intermediaries ... Get more on HelpWriting.net ...
  • 9. Mexico 's A Financial Currency Crisis In 1994, Mexico had a financial currency crisis. This event was marked as the Mexico Peso Crisis because the Mexican government had devalued the peso currency against U.S. dollar rate in December 1994. The panic of the crisis required the intervention of United States and International Monetary system to help the economic system from collapsing. Before the start of the crisis, Mexico from 1988 to 1994 enjoyed a surplus of economic achievements. Mexico during that time was going through an economic reform by taking responsibilities of huge reform policies and deregulations. Due to the reform and stability of macroeconomics, Mexico rapidly reduced inflations and increased improvement in the public sector by having the exchange rate policy under the Pact of Stability and Economic Growth to sustain economic growth. In order for Mexico to be part the international capital market, President Miguel de la Madrid's liberalized trade with the developed world These reforms involved the peg exchange rate regime, liberalization of trade and capital flows, enhanced property rights, reduced marginal income, value–added tax rates, and cuts in government spending. Most important of the reform was that the government reduced import tariffs as part of the Uruguay round of trade negotiations under the General Agreement on Tariffs and Trade (GATT). The President also implemented a series of reforms that regulated the inflow of portfolio capital and foreign direct investment into the Mexican ... Get more on HelpWriting.net ...
  • 13. Mechanism Behind The Foundation Of Bretton Woods System Introduction The main purpose of this essay is to analyse the mechanism behind the foundation of Bretton Woods system and how this system worked from 1944 to 1973. Analysis includes the mechanism of the fixed exchange rate regime based on gold and the US dollar and also includes the factors and reasons that led the system to collapse. Background of Foundation of the Bretton Woods System As far back as the World War II, the United States has been attempting to replace the Great Britain, establishing a world currency system centred in US dollar. After the war, the economic strength of the world's countries changed significantly. Unlike Europe and Japan, the United States experienced very little destruction on its own land, thus it did not only maintain but moreover strengthened the economy with its exponential growth in production. From March,1941 to December,1945, through the Lend–Lease Program the United States provided over 48395.4 million dollars' reinforcement goods to the Allies. As gold constantly flew into the United States, the country's gold reserve value increased from 1938's 14,500 million to 1945's 20,080 million dollars. The interwar has made USA the largest holder of gold (59% of the world's reserve in 1945 and 72% by 1948). This created favourable conditions for pushing US dollar to its hegemonic position. In 1944, 44 Allied nations gathered in Bretton woods, New Hampshire, United States, for the Bretton Woods conference. The 44 countries came to an ... Get more on HelpWriting.net ...
  • 17. The United States Dollar Although they are such small slips of paper and lumps of metal, they are highly valued in the eyes of society. In the United States and all around the world, money plays a powerful role in the lives of many. Nevertheless, money comes in many different forms: the European euro, the Indian rupee, the Chinese yuan, the Swiss franc, and the list continues on. Of course, in America, the United States dollar is most often used. As a major form of currency, the United States dollar can be used to purchase nearly anything as long as the buyer has enough of it. Ever since 1862, "greenbacks" have been used as legal tender in this country ("From the Colonies"), but coins have been officially part of the country's monetary system since the Coinage Act ... Show more content on Helpwriting.net ... Canada is an easy country to relate to because it borders America and has a similar currency system in place. In Canada, each penny cost 1.6 cents to produce, which is very similar to America's situation (Canada). However, in 2012, Canada decided to stop their production of their penny because they were losing too much money on a coin that only few use anymore (Sommer). In fact, Canada reports that they lost 11 million Canadian dollars each year due to its production (Canada). To adjust to this sudden change, Canada looked at the plans of other countries who have also gotten rid of currency that cost too much to produce, like Sweden and New Zealand ... Get more on HelpWriting.net ...
  • 21. Basics of Exchange Rates BACK TO BASICS Why Exchange Rates? Luis A.V. Catão OW does one determine whether a currency is fundamentally undervalued or overvalued? this question lies at the core of international economics, many trade disputes, and the new IMF surveillance effort. George Soros had the answer once–in 1992–when he successfully bet $1 billion against the pound sterling, in what turned out to be the beginning of a new era in large–scale currency speculation. Under assault by Soros and other speculators, who believed that the pound was overvalued, the British currency crashed, in turn forcing the United Kingdom's dramatic exit from the european exchange Rate Mechanism (eRM), the precursor to the common european currency, the euro, to which it never ... Show more content on Helpwriting.net ... to do this, economists usually measure the real exchange rate in terms of a broad basket of goods. Because the price of such a basket normally takes the form of an index number–such as the consumer price index (CPI), which includes both goods and services–the ReR is also typically expressed as an index that can be bench– marked to any chosen time period. Going back to the dollareuro example, if an ReR index is 1.2, the average consumer prices in europe are 20 percent higher than in the United States, relative to the chosen benchmark. Indexes don't measure absolute prices (such as the price of the Big Mac), but changes in overall prices relative to a base year (if, say, the index is 100 in the year 2000 and 120 in 2007, average prices are 20 percent higher than in 2000). In this case, if ReR indexes between countries don't change over time, we say that relative PPP holds. ReR indexes between two countries can be important. the massive U.S. trade deficit with China has become a political and economic issue, and whether its roots are in a fundamentally misaligned exchange rate is a point of contention. But, for the most part, economists and policymakers are more interested in the real effective exchange rate (ReeR) when measuring a currency's overall alignment. the ReeR is an average of the bilateral ReRs between the country and each of its trading partners, weighted by the respective trade shares of each partner. Being an average, a country's ReeR may be in ... Get more on HelpWriting.net ...
  • 25. Future Of The U.s. Dollar Future of the U.S. Dollar Today, the world economy, after witnessing the greatest hit in 70 years, is wondering what life will look like after the storm has settled. It is grappling with the fundamentals of unemployment, increasing inflation, current account deficits, negative growth, and zero interest rates along with it, depreciating the value of money. In the midst of all this the future of the U.S. dollar is uncertain. Will the dollar maintain its reserve currency status even after its depreciation and regain faith of the nations? Or will it be replaced by some other currency, shifting the power balances among the nations forever? The U.S. dollar peaked in value in 2000–2001 and has been in a significant decline ever since. There was a relatively brief period in 2008 when the dollar rebounded quite sharply due to the worldwide financial crisis and economic meltdown, when there was a global rush to the safety of U.S. treasury securities. But since then, the dollar has resumed its long–term downtrend. In the recent years the dollar has been improving relative to other currencies, becausee of the decline in those other currencies. With President Obama's most unprecedented spending plans in history, as well as trillion–dollar budget deficits and the potential to more than double the U.S. national debt in the next 5–10 years, there is now a widespread speculation that the dollar is headed for new all–time lows and a possible collapse. As a result, we are seeing and hearing ... Get more on HelpWriting.net ...
  • 29. Decline of US Dollar For more than sixty years the United States dollar has been the central reserve currency for the world. A reserve currency, also referred to as an anchor currency, is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves (Carbaugh, 2011). As the world's reserve currency, the U.S. dollar is used throughout the world as a medium of exchange and is used as the global currency for products traded within the global market. In recent years the status of the U.S. dollar has been contested by a select few around the world. Leaders are unconvinced about the future of the United States economy as their deficits are exceeding record highs. The following analysis will discuss ... Show more content on Helpwriting.net ... All of these actions by the U.S. Government have greatly increased its reliance on foreign investors to fund both large budget and trade deficits. Increased trade deficits can be concerning, but it is the United State's large budget deficits that are concerning the worldwide leaders. The trade deficit is a reflection of the United States rapid growth compared to other countries along with the continued injection of foreign funds into the U.S. due to the dollar being the reserve currency (Carbaugh, 2011). A portion of the trade deficit is a result of a capital surplus and not a reflection of an imbalance in the U.S. economy. In other words, the budget deficit is due to a structural imbalance as the U.S. is spending beyond their means. Due to the $14 trillion deficit, the United States has had to print more dollars to support their financial responsibilities. Foreign countries and investors have concerns that the U.S. will be confronted with financial difficulties in the future which will result in the depreciation of the dollar and also increased inflation. If this were to occur, foreign nations who have invested in millions of U.S. dollars would lose considerable amounts of their investments. These concerns have caused foreign investors to lose confidence in ... Get more on HelpWriting.net ...
  • 33. United States Growth and the Singapore Dollar 1. United States growth has slackened to2.4% in fourth quarter from a robust 4.1% growth in third quarter. This moderation was mainly due to an acute decrease in residential fixed investment that is in relation to dawdling home sales as well as lesser addition to stock. Comparing the two quarters, stocks contributed to 0.1% point growth in quarter four. Fiscal policy sustained the drag of the economy in relation to an acute decrease in federal spending. Notably, the significant support to the economy originated from private household spending instead. There was an earlier indication that United States could expand moderately in the first quarter of 2014 but this has not materialized. The slow growth can be attributed to declining retail sales, declining trade balance, and inventory adjustments. Real sales retail declined by 0.4%, in January while shipment of durable products decreased by an extra 0.4%. However, the increase in PMI Manufacturing from 51.3 to 53.2 indicates the weakness in first month was weather–related.United State faces a state of unemployment and although the rate is slowly cutting down it is still steady. This implies that the rate of inflation went high in the month of January so as to equitably allocate the scarce production. Economy seems to grow at lesser pace, while inflation rate grow at higher rate.Therefore, the deceleration in the actual gross domestic product in quarter four showed a declining in private inventory investment, a higher decline ... Get more on HelpWriting.net ...
  • 37. United States Financial Environment After The Collapse Of... Abstract: From the perspective of monetary mechanism, this paper explains that the essence of petrodollar system is struggling over the gains to be had from producing the world 's leading currency. Furthermore, taking Euro as an example, this paper pointed out that the potential inflationary pressure to strike the United States financial environment after the collapse of petrodollar system. By maintaining current monetary system and getting rid of tremendous budgetary deficit, this paper also gives several useful solutions that should be used to against economic rift between the U.S. and other countries and protect national economic security. History of Petrodollar system: During and immediately after the Second World War, the United ... Show more content on Helpwriting.net ... Especially in the Vietnam War, the total cost was 111 billion dollars including human, economic, political and social cost. It was equal to 2.3% GDP in peak year of the war. Until August 1971, the Bretton Woods system was replaced by a regime of floating exchange rates that remains in place to the present day. The dollar became a pure fiat currency after the collapse of Bretton Wood System and the value of other currencies were not pegged to the dollars firmly. Therefore, U.S. dollars lack the functions as the standard of value and store of value theoretically. However, in the absence of a credible alternate currency at that time, the U.S. dollar was still considered as the default reserve currency widely (). In addition, as the exchange of weapon and military protection, in 1971, the Saudis applied pricing all of its oil in U.S. dollars only and was open to investing their surplus oil proceeds in U.S. debt securities. America then sensed the importance of crude in the constantly modern world and settled with similar deals with other oil exporting countries. By 1975, all OPEC members didn't have a choice but had agreed to popularize trading their oil exclusively in dollars and to hold their surplus oil proceeds in the U.S. government debt markets in exchange for the military defense and welfare offers by the U.S. (Jerry 2011). Since then, with the ending of "USD for Gold "system, the world ushered in a new era of "USD ... Get more on HelpWriting.net ...
  • 41. The United States : A Multibillion Dollar Industry Healthcare in the United States is a multibillion–dollar industry. Over time, the number of elderly people which have fallen victim to Medicare and Medicaid billing fraud has sky rocketed at an alarming rate. The Elder Abuse & Nursing Home Neglect Attorneys refer to this as an "overbilling epidemic" (n.d.). This means that many elders are being charged more money for the services they are receiving or in some circumstances, paying healthcare providers without receiving any care. Since most of them are unaware of what they are being charged for or how much they should be charged, they are easily taken advantage of. Medicare and Medicaid, which were formed to help and maintain the health of people deviated from that over time into an ... Show more content on Helpwriting.net ... Upon reading further into Medicare and Medicaid billing fraud, I have learned that there are many types of fraud. Doctors who commit fraud can do so in many ways, such as billing for services never received, performing unnecessary procedures, falsifying documents to perform more procedures, and even accepting money for patient referrals, among others. This signifies that some physicians are potentially physically harming their patients for their own financial benefit. Some providers, nevertheless, believe that they can "outsmart" the system and choose to overbill their elder patients. By overbilling their patients, it is harder for the government to keep track of that. However, with the Affordable Care Act, there have been new rules and regulations to avoid all types of fraud as much as possible. With the enactment of the Affordable Care Act, several organizations have begun bringing awareness to healthcare fraud and have fought to prevent it, some of which are the Health Care Fraud Prevention Partnership and Senior Medicare Patrols. Furthermore, the Affordable Care Act has taken many precautions to prevent fraud, such as using "fraud detection technology, enhancing provider screening and enrollment requirements, and having a greater oversight of private insurance abuses" (Centers for Medicare & Medicaid Services, 2015). Private insurers typically "lose an [estimated] 1%–1.5% of their revenue to fraud alone" (Health Research ... Get more on HelpWriting.net ...
  • 45. Essay on Current Account Deficits Carbaugh (2011) asks, "Can the United States Continue to Run Current Account Deficits Indefinitely?" (p. 361). Ultimately in the long term the answer is no, but the question could be rephrased to ask: (1) Does the United States' unique position in the world economy allow the country to safely run persistent external deficits? and (2) can persistent U.S. deficits in the current and payments accounts be adjusted without bringing about economic recession or crisis? Japan, China, and Middle Eastern oil countries have enabled this deficit to continue by heavily investing in U.S. Treasury securities (Carbaugh, 2011). Because foreigners desire to purchase American assets, Carbaugh (2011) concludes that "there is no economic reason why [the ... Show more content on Helpwriting.net ... dollar. (p. 5) Deutsche Bank (Karczmar, 2004) suggests that the euro could eventually challenge the dollar as a reserve currency, but the euro is still far behind the U.S. dollar as a reserve currency, representing just 24.2 percent of the world banking reserves in the 2013 third quarter (International Monetary Fund, 2013). Numerous economists endorse the United States' ability to safely continue its external deficits. Cooper (2001) poses the argument in its simplest form: It is often suggested that the large current account deficit poses a serious financing problem for the United States. Each year, the lament goes, the United States must attract net inflows of capital sufficient to "cover" the huge current shortfall. But this proposition gets the logic backward: the U.S. deficit is "financed" by net capital inflows only in an ex post accounting sense. In economic terms it is more nearly correct to say that net capital inflows cause the current account deficit. (p. 218) Likewise, Edwards (2005) suggests that "since the U.S. current account deficit poses no threat, there are no fundamental reasons to justify a significant fall in the value of the dollar" (p. 212). Bertaut, Kamin, and Thomas (2009) observe that "with the real multilateral ... Get more on HelpWriting.net ...
  • 49. The United States Savings And Investments A trade surplus occurs when there is positive difference between the United States savings and investments. This means that the United States in this instance has exported more than it has imported to the rest of the world. A positive current account also suggests that the United States' net assets will be increased by $2,399 million. The capital account deficit implies that there is money flowing out of the United States and that the nation is increasing its ownership of foreign assets. The surplus in the current account exceeds the capital account deficit; therefore, the balance in the reserve account should be $2,484. It is important to mention that this figure includes the possibility of small errors and omissions. 1(b). What are the ... Show more content on Helpwriting.net ... (e.g. what was the impact of the Suez crisis?) In terms of the effects of the Suez Crisis, after oil exports from the Middle East were disrupted, this gave America the opportunity to export oil to its Allies, which effectively increased its exports. This had the effect of increasing the current account as America effectively capitalized on the oil shortage by exporting it to their allies. The creation of the European Economic Community (EEC) also had effects on the free trade. As European countries began to discuss tariff decreases, the process was also conducted on a product by product basis with lengthy progression. However as European countries began to trade with each other, the aggregate demand for American goods dropped relative to the increase in demand for each other's goods. Under the Bretton Woods system, members of the EEC did not need to worry about converting their currency into gold. EEC members were also able to take advantage of using unconvertible currencies and devaluing their currencies to correct for problems with their balance of payments. For the United States, keeping conversion available as well as defending its par value, as well as having unrestricted capital flows created economic turmoil for the United States moving forward. As a result of free trade and economic advancement in Europe, demand for US dollars began to decline for investment, and thus a glut of US dollars on the market, which forced the Central Bank to make up for ... Get more on HelpWriting.net ...
  • 53. Money How The Destruction Of The Dollar Threatens The... Throughout time, gold has preserved its value better than any other precious material (Forbes and Ames 131). Even with that known there are still arguments against the gold standard. A few of those arguments are; there isn't enough gold on earth for a gold standard, gold will tie a governments hands and prevent growth, or how gold shows too much price volatility to be a reliable anchor, but the 21st century gold standard challenges the validity of those arguments. In Steve Forbes and Elizabeth Ames book, Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It, they do a wonderful job describing the biggest fears people have if the United States returns to a gold standard (Forbes and Ames 155). The first concern is that there isn't enough gold in the world to have a gold standard today. Based on today's global economy, including the U.S monetary base, that is correct but doesn't much matter. Having a piece of gold for every dollar on earth is a general misconception. Gold doesn't have to be based on the global supply. It must be used as a stable "yard–stick of value" (147). Lack of knowledge of gold backed currency is the reason people are so afraid. There are plenty of countries that don't have an ounce of gold. As long as gold is used as a measurement tool, those countries can tie their currency to the U.S. dollar, which is then tied to gold. In fact, not any country to this day has ever had 100% of its money backed by gold. This ... Get more on HelpWriting.net ...
  • 57. Exam: United States Dollar and Forward Contract Name: _________________________________________ Instructions: The exam is composed of ten problems. Make sure you have all pages in your exam. Including this cover page, you should have ten pages. Each problem has its own set of instructions. You may use abbreviations for labels to save time. Unclear responses will receive 0 points. Partial credit will be awarded. If you need additional space for your answer, use the back of the page. Problem 1 5 Points Mint Corporation has several transactions with foreign entities. Each transaction is denominated in the local currency unit of the country in which the foreign entity is located. On November 2, 2009, Mint sold confectionary items to a foreign company at a price ... Show more content on Helpwriting.net ... During 2008, 2009, and 2010, Jones Bag reported net income of $8,000, $12,000, $20,000, and dividends of $15,000, $10,000, and $10,000 respectively. A. Calculate the amount of income Phillips would report on its 2008 and 2009 financial statements related to its investment in Jones, assuming it accounts for its investment using the Cost Method. Be sure to clearly indicate your answer for each year. (4 ... Get more on HelpWriting.net ...
  • 61. Central Bank Government Of China In 2005, Zhou Xiaochuan, the Central Bank Government of China who has been in power for the past 13 years, announced that the Renminbi would switch exchange rate regimes and would begin to follow a more flexible regime that was tied to a basket of different currencies. Prior to this new change, the Chinese yuan was strictly pegged to the US dollar, which helped them thrive economically in the global market. Less than a decade before the exchange rate regime was changed, the Asian financial crisis occurred and many East Asian countries were impacted. Compared to its neighboring countries, China was not impacted as badly as other countries, therefore it continued to stay afloat during this difficult period of time and continued after the ... Show more content on Helpwriting.net ... Asian Financial Crisis The Asian Financial Crisis, that began in the middle of 1997, was a surprise to many. It all started when Thailand had a financial crisis which ended up spreading to its neighboring Southeast Asian countries. This mass spread was largely due to the intense devaluation of currencies in Asia . The crisis caused mass capital outflows and investor flight because investors lost confidence in the financial systems in many of those countries. Although it started out being contained in Thailand, it spread to other East Asian countries and ended up impacting Malaysia, Indonesia, the Philippines, South Korea, Hong Kong, and China. Consequently, the lack of investor confidence caused the international stock markets suffered from this crisis, which also impacted other countries that reside outside of the Asian continent. During the crisis, the greatest issues that China faced were a decrease in income level, many of its companies went under, and there was tremendous pressure on the yuan to devalue (Yongding, 164). The Chinese government at this time had concluded that being pegged to the US dollar at a market exchange rate that equaled about 1 USD= 8.28RMB was the best chance they had to keep the yuan stable (Frankel and Shang Jin, 595). The stability that the US dollar was able to provide the Chinese yuan helped the issues it was facing not become even bigger ones. If the Chinese yuan had devalued more than it ... Get more on HelpWriting.net ...
  • 65. The Limitations Of Contemporary Currency Hegemony And The... Chapter 4 – The Limitations of Contemporary Currency Hegemony and the Transition to Multipolarity The prevailing presumption amongst currency scholars of the past century is that issuing a currency that dominates global markets and trading is of overwhelming benefit, largely interpreted via the gains made by the US as the issuer of the dollar. These benefits have been both political and economic in nature, as discussed in the previous chapter. However, both domestic and external factors have begun to detract from the dollar's pinnacle currency gains, and leads to questions of whether what was once described as an "exorbitant privilege" is deteriorating to the extent that it is a burden. While assessing the dollar's evolved role as a 'burden' appears premature, nonetheless it appears the capacity of the US to use the dollar as a mechanism for power is under threat. In fact, the US dollar may well be more than just 'under threat'. It is no longer able to exert influence like it once was, but relies on the benefits it solidified for itself at the formation of the globes monetary structures. The leverage available to the United States through the use of dollars is still greater than any rival currency, but it is not absolute as it was decades before. While much has been written about the euro, and the dollars other potential replacements at the pinnacle of the currency pyramid, what appears more likely is a "leaderless currency system" as Cohen termed it, with no clear ... Get more on HelpWriting.net ...
  • 69. The Trump Economic Pl Trade, Regulatory And Energy Policy... I will be reviewing Donald Trump economic report, "Scoring the Trump Economic Plan: Trade, Regulatory and Energy Policy Impacts," was written by Peter Navarro and Wilbur Ross. In addition to Jared Bernstein, "Dethrone 'King Dollar,'" The New York Times, August 27, 2014. Neil Irwin, "The Trade Deficit Isn't a Scorecard, and Cutting It Won't Make America Great Again," The New York Times, 3/27/2016 and Kenneth Rogoff, "Anti–Trade Rhetoric is a Recipe for Disaster," The Boston Globe, 4/11/2016. Mr. Navarro is an economics professor at the University of California, Irvine. Mr. Ross is an investor whom Mr. Trump has chosen to be secretary of commerce. The report is about the trade deficit. Navarro and Ross claim that if better policies eliminated this "trade deficit drag," GDP would be higher and more people would be employed. As well as the NY Times article that dissects Trump's report, "Want to Rev Up the Economy? Don 't worry About the Trade Deficit" was written by N. Gregory Mankiw in the Economic View section. Through these articles, If the net capital outflow is positive, that is, domestic saving exceeds domestic investment, then it suggests that a part of domestic savings is going abroad and the economy is lending to foreigners. Similarly, if the net capital outflow is negative, that is, domestic saving falls short domestic investment, then it suggests that a part of domestic investment is financed from abroad and the economy is borrowing from foreigners. Net capital ... Get more on HelpWriting.net ...
  • 73. Market Analysis : Currency Etf With the growing popularity of ETF 's, investors have found it very easy and relatively inexpensive to trade currency ETF 's to take advantage of fluctuations between currencies. Currency ETF 's are purchased to track most international currencies including the U.S. Dollars, Canadian dollars, and Mexican peso. Currency ETF 's aim to replicate movements in currency in the foreign exchange market by holding currencies either directly or through currency–denominated short–term debt instruments. Launched in 1996 the iShares MSCI Mexico Capped ETF (EWW) is the most popular and common ETF, offering retail investors an immediate approach to gain exposure to an extensive scope of Mexican equities. It tracks the MSCI Mexico IMI 25/50 record. This ... Show more content on Helpwriting.net ... The peso had been at 12.5 to 1 dollar for around 22 years, from 1954 to 1976. In 1976, the Mexican peso decreased from 12.5 pesos to 1 dollar to 22 pesos to the dollar and continued to depreciate against the U.S. Dollar during the next 16 years, to end up in December 92 at more than 3000 pesos to 1 U.S. Dollar. In January of 1993, to ease foreign exchange, the government introduced the new peso, worth 1,000 of the old and divided into 100 centavos. Extreme international demand for Mexican stocks and high–yielding two–year treasury certificates known as CETES, kept the New peso at a reliable level of 3.1 New pesos per U.S. Dollar for most of 1993. The Mexican peso declined as losses in bonds supported by United States subprime home loans led investors to avoid higher–yielding securities. The peso slid 1.6 % in 2006. Defaults on bonds supported by United States subprime mortgages triggered $80 billion in write–downs and losses at the biggest banks and securities firms that year. In 1990 one U.S. Dollar exchanged on average for 2.8 Mexican pesos. By 2007, the peso had fallen against the dollar by almost 75 %, with an average exchange rate in 2007 of 10.9 pesos per dollar. Mexican products did not become cheaper compared to US products over that 17– year period nor did the price of Mexican products expressed in terms of U.S. Dollars fall by 75% because Mexico had much higher inflation than the United States over that period. In fact, the relative price of U.S. and ... Get more on HelpWriting.net ...
  • 77. Global Fiscal And Money Related Framework Essay There is an essential contrariness between the achievement of worldwide monetary strength and having a single national currency play out the part of the world 's reserve cash. This is not another disclosure. However, occasions of a previous couple of months have brought this theme over into the spotlight. Born in Belgian, American economist Robert Triffin initially highlighted this contrariness in the 1960s. He watched that having the US dollar play out the part of the world 's reserve currency made essential irreconcilable situations amongst national and universal financial and economic goals. From one viewpoint, the global economy required dollars for liquidity purposes and to fulfill interest for save resources/assets. In any case, this constrained, or possibly made it simple, for the US to run reliably massive current account deficits. (CANAVAN). Every global fiscal and money related framework needs to depend on at least one universal currency so as to permit financial specialists to interface in the global economy by utilizing such coinage as a method of payment, a unit of record or a store of significant worth. At the point when these global currencies are additionally local ones, the supply of global liquidity comes from at least one "center nations." Furthermore, when the center governments work as a restraining infrastructure or semi– imposing business model, after some time they tend to exploit other countries ' high reliance on their local cash. By misusing this ... Get more on HelpWriting.net ...
  • 81. The Impact Of The Plaza Accord The Plaza Accord or Plaza Agreement was the agreement, which signed in 1985 at Plaza Hotel in New York City, among the G–5 nations which included France, Germany, the United States, Japan, and the United Kingdom agreed to operate exchange rates by depreciating US dollar relative to the Japanese yen and the German Deutsche mark. The objective of the Plaza Accord was to correct trade imbalances between the U.S. and Germany and the U.S. and Japan. Also to help the U.S. improve its huge trade deficit and to stimulate its economy to climb out of the 1980's long recession. The United States experienced 3% GDP growth during 1983 and 1984 with a current account deficit approaching approximately 3–3.5% of GDP, while European nations faced a negative GDP growth of –0.7% with huge trade surpluses. The same thing happened to Japan. Trade deficits in general need foreign financing. During the early to mid 80s, for the United States, Japan and West Germany were buying United States bonds, notes and bills from their surpluses to finance our current deficits at the expense of their own economies. In 1985, inflation was low and growth was rapid. Low inflation allowed for low interest rates, however there was a threat of protectionist tariffs entering the economy. The US was ... Show more content on Helpwriting.net ... The impact of the intervention was immediate and within two years the dollar had fallen relative to Germany Deutsche mark and relative to the Yen. The Us Economy also became geared more toward exports, while Germany and Japan increased their imports too. This helped resolve the current account deficits and helped to minimise protectionist policies. However, among the G–5 nations Japan was badly affected, from the Plaza Accord, by the dramatic rise in the Yen it's exporters unable to remain competitive overseas and Japan also experienced the economic crisis following the Japanese asset price bubble during the 1990s called the Lost ... Get more on HelpWriting.net ...
  • 85. Exchange Rate Fluctuation Factors On Currency Exchange Rate Fluctuation Factors The value of currency within a given country holds a different value to the currency of another country. The values of currency are determined by an exchange rate. In quoting the exchange rate two methods can be used; the indirect and direct. The indirect method quotes one unit of the local currency in units of foreign currency whereas the direct method quotes foreign currency in units of local currency (SAP Solutions, 2015). Obtaining exchange rates to compare the United States Dollar (USD) to other currencies is best completed using the direct exchange rate to provide consistent data and reporting. Strength of the United States Dollar In comparing the exchange rates of the USD to foreign currencies, four additional countries were used to complete a two year comparison: Japanese Yen (YEN), European Euro (EURO), British Pound (GBP), and Mexican Peso (MXN). Exchange rates were obtained from March 2013 through March 2015. The monthly average direct exchange rates were compiled in graphs to show the strength of the USD against the foreign currencies of each country. Though the exchange rates between the dollar and other country's currency fluctuates monthly, it was a gradual change over the past two years against the YEN, EURO, and MXN. The exchange rate between USD and GBP was the most volatile change over the two year period. Overall, the USD has strengthened against the YEN, EURO, MXN, and GBP since June of 2014 (Prakken & ... Get more on HelpWriting.net ...
  • 89. How Theu.s Dollar Became The World's Most Dominant Reserve... The objective of this paper is to give a clearer picture to how the U.S dollar became the world 's most dominant reserve currency . Several countries use it as their official currency, and many others use it as the de facto currency . Moreover, American dollar is the primary reserve currency, which is used as the standard unit in international market for commodities such as gold and petroleum. However, the dollar has been declining over the last three decades; in fact it has lost almost half its value against other major currencies. The purpose of this research is to bring clarity for the following questions: How, when and why the dollar became the world's reserve currency? Benefits of having the largest world reserve currency? Comparing the dollar with the pound and the up and rising Chinese Renminbi (RMB), and predictions for the future. Keywords: Currency fluctuation; Reserve Currency; International Market; Global Reach I. Introduction We use the term "reserve currency" when we mean other countries ' use of dollars in international trade. If Sweden, for example, buys goods from China, the goods can be paid with American dollars instead of Swedish Krona. The methodological approach to address how, when and why the dollar became the world's reserve currency will be supported by a historical and statistical analysis. With a better understanding on how the U.S dollar become the most powerful currency we can advance to understand the cost and benefits of it. ... Get more on HelpWriting.net ...
  • 93. Dollar vs. Euro 1. Introduction Since the appearance of the EURO (€) in the international trading system, the American dollar ($) has lost its domination and role in the financial world. Consequently, there is not only a great disparity in the exchange rate between the two currencies in favor of the EURO, but a growing problem in the US economy as well. Table 1, which can be found in Appendix B, shows the course and relationship of the exchange rates of the two currencies from 1999 until now. The scope of this paper is to approach as best as possible the various reasons for this disparity and try to predict the future of the two currencies based on accurate and up–to–date information. At this point, the authors would like to make clear that they do not ... Show more content on Helpwriting.net ... At this point we should clarify that the exchange rates are influenced by the combination of the reasons mentioned above. Nevertheless, we will try to break them down and examine them individually. 2. Interest Rates One of the most important factors that affect and change the exchange rates is the interest rates, which are announced by the FED and the ECB. With the terms FED and ECB, we refer to the Federal Reserve System and to the European Central Bank. The former is the central banking system of the United States, whereas the latter is one of the world 's most important central banks. However, both of them are responsible for the monetary policies in the countries or states that they are consisted of, by setting a wide variety of rates, in order to stabilize their economies. The two main and general rates which affect the exchange rates are the borrowing rate and the deposit rate. Currently, the rates for the United States are 5.25% and 5.25% respectively, whereas for the Eurozone the rates are 5% and 4% respectively. This means in simple and broad words that it might be more profitable for someone to borrow money from the Eurozone, since he will have a gain of 0.25%, but it will be more profitable if ... Get more on HelpWriting.net ...
  • 97. United States Dollar Lufthansa Lufthansa Lufthansa In January 1985, a German company that uses Deutschmarks made a large purchase from a U.S. company that uses U.S. dollars, and needed to evaluate the best hedging alternatives to secure the least possible cost. The Chairman of Lufthansa, Herr Heinz Ruhnau, purchased twenty 737 jets from Boeing. The total purchase price was $500,000,000, which was payable in U.S. dollars on delivery of the aircrafts in one year. Chairman Ruhnau chose a partial cover by hedging 50% of the exposure with forward contracts, which was $250 million at the one year forward rate of DM3.2/$. He left the remaining 50% ($250 million) uncovered. Due to this decision, Lufthansa paid DM225,000,000 more than if Ruhnau would have ... Show more content on Helpwriting.net ... This steady rise showed the U.S. dollar was strong and would steadily increase or fluctuate around at a similar number. Scenario 3: The U.S. dollar may decrease Even though Ruhnau and many others expected the U.S. dollar to decrease, there was no way of knowing with absolute certainty that would come to fruition and how much it would actually fall. Ruhnau needed to make a decision with the information he had. Forecasting There are various forecasting techniques, which include the Efficient Markets Approach, the Fundamental Approach, and the Technical Approach. Even if Ruhnau researched and followed these methods, they would still not predict with certainty the future U.S. dollar rate. They would either confirm or counter his expectations and he would need to make a decision without being able to accurately predict the future exchange rate. There are also other factors that could dramatically affect the U.S. dollar or German Deutschmark, such as unexpected events which could make significant impacts in appreciation or depreciation. Necessity, Timing, and Purchase Price In the 1980's, Lufthansa increased the number of non–stop connections and more dense route
  • 98. networks (History). The aircraft purchase could have been necessary at this time because the aircrafts could be used for expansion or growth. Potential sales from expansion opportunities of adding new flight routes, additional flight time options, or other additional uses would be a ... Get more on HelpWriting.net ...
  • 102. United States Dollar and Gold Standard Describe the mechanism, which would take place if the Bank of England decides to increase its money supply by purchasing domestic assets under the GOLD STANDARD. The gold standard has three distinct monetary systems in which the standard economic unit of account is a fixed weight of gold. The gold specie standard is a system, which a monetary unit is associated with circulating gold coins, or with the unit of value circulating gold coin in conjunction with lesser coinage made from a lesser valuable metal. Similarly, the gold exchange standard involves circulation of only coins made of silver or other metals and finally, the gold bullion standard is a system in which gold coins do not circulate, but authorities have agreed to sell gold ... Show more content on Helpwriting.net ... The Bank of England could purchase pounds by selling dollars in order to shift the demand curve for pounds and the Fed could shift the demand curve by buying the pounds. If the British choose to purchase more of U.S. goods and services, the supply curve for pounds increases, and the equilibrium exchange rate for the pound (in terms of dollars) falls to, say, $3. Under the terms of the Bretton Woods Agreement, Britain and the United States would be required to intervene in the market to bring the exchange rate back to the rate fixed in the agreement, $4. The fixed exchange rate systems offer the advantage of predictable currency values–when they are working. In order for the fixed exchange rates to work, the countries participating in them must maintain domestic economic conditions that will keep equilibrium currency values close to the fixed rates. If adjustment were made by the British central bank, Bank of England, it would have to purchase pounds and would do so by exchanging dollars it had previously acquired in other transactions for pounds. As it sold dollars, it would take in checks written in pounds. When a central bank sells an asset, the checks that come into the central bank reduce the money supply and bank reserves in that country and holders of pound deposits will attempt to sell them for foreign deposits. The sale of dollars by the Bank of England would reduce the ... Get more on HelpWriting.net ...
  • 106. Country And Economy Overview Of The United Kingdom Essay 1. Country and economy overview of the United Kingdom (macro level) 1) Overview of the economy of the United Kingdom. The economy of United Kingdom has long been one of the most advanced economies in the world. Having been through the Industrial Revolution in 1900s, it has found its footing and established itself as a global economic powerhouse. Measured by purchasing power parity, the UK is currently ranked as the fifth largest economy in the world, contributing to 4% of the world GDP. It has a GDP of $2.5 trillion. The United Kingdom is characterized by its open market, capitalist economy that allows freedom of movement of goods and people within the European Union. The United Kingdom, in particularly London, is one of the epicenter of the world 's financial market. It has one of the world 's busiest derivative market and foreign exchange market. The London Stock Exchange exerts a tremendous amount of influence on the world 's stock exchange, with a total market capitalization of as of 6.06 trillion pounds as of December 2014. Overall, the service sector, including the financial services sector, contributed 77.8% of the British GDP in the first quarter of 2014.. The recent performance of the financial sector of the UK managed to beat estimates is a clear evidence of its status as one of the leading financial command centers in the world. The London Interbank Offered Rate, also known as LIBOR, is widely used as the key short– term interest rate worldwide. As with most ... Get more on HelpWriting.net ...
  • 110. Economic Relations Between U.s. And Japan More and more many researchers have accepted the economic relationship between the U.S. and Japan as a subject worthy of academic consideration and evaluation, especially considering the continuously decreasing trade deficit of the U.S. Many believe several factors play a role in the United States' relationship with Japan including both microeconomic and macroeconomic factors. Some of these include savings and investment rates as well as industry structure, barriers to trade and even the value of Japanese yen compared to the U.S. dollar. Researchers disagree on which ones affect the United States trade deficit the most however, each can agree that more than one factor plays a part in the declining economic relationship between the U.S. and ... Show more content on Helpwriting.net ... jobs in 2013 alone. The value of the yen continues to decrease today, which makes it hard for U.S. exporters to be able to sell their products at a reasonable price which creates a trade deficit and affects the number of jobs available. Hogan (2015) studied the relationship between the Japanese yen and to U.S. dollar exchange rate. Over the past two decades, the yen has changed drastically. By 2011, the yen to dollar value was received to be 80 yen to/1 dollar. Hogan (2015) reviewed a simple example of how the U.S. to yen–dollar rates affects the production and selling of goods. In this example, Hogan (2015) took two Japanese automobile manufacturers. Company A in his experiment built its cars in Japan and exported them to the U.S. while company B has a factory in the U.S. and built their cars in the U.S. He found that if it cost company A 1.2 million yen (10,000 U.S. dollars) at a rate of 120 yen/ to 1 dollar and it costs company B 10,000 dollars to make the same model. Both companies sell their cars for 15,000 dollars and both would in return make a 5,000 dollar profit. However this would all change if the value of the yen strengthened. Once the value of yen strengthens it will cost more U.S. dollars to make or purchase a product. So Hogan (2015) altered his experiment and found that if the yen value strengthened and the yen to dollar ratio became 100 yen/ 1 dollar and it still cost company A 1.2 million yen to produce a car it will cost ... Get more on HelpWriting.net ...
  • 114. United States Dollar and Foreign Currency Information ESmith Assignment 10: National and Global Finance (16.0 points) 1. Choose an example of a type of new company you could start, and then use this company idea to answer the questions below. You might choose a pet store, a restaurant, a tutoring business, or something else. This can be the same type of company you chose in assignment 8 or 9, or it can be different. a. Describe the type of business you chose. (1–2 sentences. 0.5 points) * The type of business I would start would be for family or friends gatherings. This business would be place people come to eat and social, a nice, warm environment. b. Describe at least two ways in which the local, state, or federal government would have an impact on your business. (2–4 ... Show more content on Helpwriting.net ... (1–2 sentences. 0.5 points) * Products that are commonly imported in the United States are oil, cars, and clothes. These products are very important to humanity. 8. Describe at least two products that are commonly exported from the United States to other countries. (1–2 sentences. 0.5 points) * Products that are commonly exported from the United States are things such as medicines, aircrafts, and cars. These are products are also important to humanity of different countries. 9. Why does the U.S. government encourage U.S. companies to sell their products in other countries? Explain how this helps the U.S. (2–4 sentences. 2.0 points) * So companies can increase company revenue and be able to dominate international markets in order to establish more stores and spread product around. A good example is McDonalds, they are everywhere. This helps the US because in revenue allows a company to keep its base in the US, increase the national gross product, drive consumer activity, keep jobs, and increase the export business, which goes along with jobs. 10. Find the value of one U.S. dollar in a foreign currency. You might choose the Euro, the Japanese Yen, the Canadian dollar, or another currency. List the type of currency and the current value of the U.S. dollar in that country. (1.0 points) TIP: http://www.google.com/finance/converter is a good resource for foreign currency information. * Here is a good resource for foreign currency
  • 115. ... Get more on HelpWriting.net ...
  • 119. Eco Unit 11 Exchange Rates Quiz AP Economics –– Exchange Rates Quiz –– Do Not Write On This Booklet!!! 1. U.S. export transactions create: A) a U.S. demand for foreign monies and the satisfaction of this demand decreases the supplies of dollars held by foreign banks. B) a U.S. demand for foreign monies and the satisfaction of this demand increases the supplies of dollars held by foreign banks. C) a foreign demand for dollars and the satisfaction of this demand decreases the supplies of foreign monies held by U.S. banks. D) a foreign demand for dollars and the satisfaction of this demand increases the supplies of foreign monies held by U.S. banks. 2. U.S. import transactions create: A) a foreign demand for dollars and the satisfaction of this demand decreases the supplies ... Show more content on Helpwriting.net ... imports and exports. C) decrease the prices of U.S. imports, but increase the prices to foreigners of U.S. exports. D) increase the prices of U.S. imports, but decrease the prices to foreigners of U.S. exports. 15. Appreciation of the Canadian dollar will: A) intensify an existing disequilibrium in Canada's balance of payments. B) make Canada's exports less expensive and its imports more expensive. C) make Canada's exports more expensive and its imports less expensive. D) make Canada's exports and imports both more expensive. 16. If the dollar depreciates relative to the Russian ruble, the ruble: A) will be less expensive to Americans. B) may either appreciate or depreciate relative to the dollar. C) will appreciate relative to the dollar. D) will depreciate relative to the dollar. Page 2 AP Economics –– Exchange Rates Quiz –– Do Not Write On This Booklet!!! Use the following to answer questions 17–22: Use the following diagram of a flexible exchange market for foreign currency to answer questions 73–78: Dollar price of 1 euro S $.80 D 0 Q1 Quantity of euros 17. Refer to the above diagram. At the equilibrium exchange rate: A) $1 will buy 1.25 euros. B) 1 euro will buy $.80. C) 1.25 euro will buy $1. D) $1 will buy 8 euros. 18. Refer to the above diagram. At the price $.80 for 1 euro: A) the quantity of euros demanded equals the quantity supplied. B) the dollar–euro exchange rate is unstable. C) the dollar price of 1 euro equals ... Get more on HelpWriting.net ...
  • 123. United States Dollar as Reserve Currency In February of 2011, the International Monetary Fund (IMF) shocked the world by calling for the United States dollar to be replaced as the global world currency (Rooney, 2011). In one report, the world's dirty little monetary secret had been exposed; faith in the US dollar was faltering. Since then, international attitudes toward the US dollar have only gotten worse. With 2013 debt at approximately 105 percent of gross domestic product and a negative outlook rating from Standard's and Poor, the United States is looking like an insolvent bank no one wants to keep their money in. In addition, the dollar has lost 97 percent of its value since being taken off the gold standard in 1971 (Mack, 2011). This makes holding the dollar long–term a ... Show more content on Helpwriting.net ... While it is said the dollar is now back by "the full faith and credit" of the United States, this faith and credit is largely treasury bonds, or debt, much of which are held overseas by foreign governments. Ever since the US dollar went off the gold standard in 1971, other countries have had doubts about keeping the dollar as the world's reserve currency. The first concern was that no fiat currency has succeeded long–term. In a study of 775 fiat currencies (Mack, 2011), there was no historical precedence for a fiat currency that has succeeded in holding its value. 20 percent failed through hyperinflation, 21 percent were destroyed by war, 12 percent destroyed by independence, 24 percent were monetarily reformed, and 23 percent are still in circulation approaching one of the other outcomes (Mack, 2011). The average life expectancy for a fiat currency is 27 years, with the shortest life span being one month (Mack, 2011). It is one thing if an individual country's fiat currency collapses, but if a world reserve currency collapses, such as the US dollar, the world's economy will collapse with it. Another issue is the dramatic drop in the value in the dollar. As stated earlier, the US dollar has lost 97 percent of its value since being taken off the gold standard in 1971 (Mack, 2011). Not only does a weaker dollar translate into a cut in the real spending power of American consumers, it makes the dollar a very poor investment for investors and central banks around the ... Get more on HelpWriting.net ...
  • 127. U.s. Foreign Trade Agreements The late 1980s and early 1990s marked an age of reform and liberalization in Mexico. After a long period of economic turmoil and isolation behind its borders, Mexico began to allow foreign capital and foreign direct investment (FDI) to flow into its economy, and the external debt that had been hanging over Mexico's head since the 1982 balance of payments (BOP) crisis was finally restructured. With the signing of the North Atlantic Free Trade Agreement (NAFTA) on January 1, 1994, a trilateral trade bloc was created in North America between Mexico, the United States, and Canada. Foreign trade restrictions were eliminated and commercial agreements with other countries were negotiated, consolidating Mexico's integration into international ... Show more content on Helpwriting.net ... Nevertheless, many bankers were willing to pay up to three times the banks' book values in a purchase due to the PRI and Salinas administration's tactics and the design of the banking system itself. First, the administration signaled to potential investors that it would aggressively limit competition in the banking industry, essentially creating the lure of an oligopoly. Second, the PRI was able to control accounting rules over the years to blur the true value of bank assets and to manipulate the treatment of loans and past–due interest in the favor of government. Third, the investors were able to craft a deal in which they did not have to put up their own capital for the investment. In fact, they often borrowed the funds for the purchase from the very banks they were buying. This series of government decisions nearly guaranteed that the banks would engage in risky behavior. Because the bankers had little capital at risk, they had little incentive to lend money in a judicious manner. Bank credit thus grew at a swift pace as banks began to compete with little regard for the riskiness of extended credit; however, the rapid growth in lending was not matched with a growth in deposits. From 1992 to 1994, loans exceeded deposits by approximately 20%, and the difference was funded through interbank lending, largely from foreign banks in foreign currency which was now allowed under the new ... Get more on HelpWriting.net ...
  • 131. United States Dollar and Currency Essay 1. International Business Issue – Can Bitcoin be a stable currency for international business? Definition, Application, and Prospection 1)What is Bitcoin? Bitcoin is an open source peer–to–peer payment network and digital currency introduced in 2009. It is the first decentralized digital currency. It is the digital coin that you can send through the internet. Compare to other alternatives, Bitcoins have a number of advantages. Bitconins are transferred directly from person to person. This means that the fees are much lower you can use them in every country. Bitcoins are generated all over the internet by anybody running a free application called a bitcoin miner. Mining requires certain amount of work for each block of ... Show more content on Helpwriting.net ... It is almost 10000%. The stability of bitcoin as a currency is still controversial. Thus, I would like to say that though bitcoin has a lot of advantages, it has some definite weaknesses to be a substitute for currencies. Firstly, there have been lots of different form of virtual currencies so far. And they all got shrunk. If someone is a good programmer, anybody can make a new digital currency. If so, the advantage of bitcoin which is that there is a limit for issuing amount will disappear. Moreover, existing currencies are based upon each nation's control. Currency economies cannot exist outside of taxation systems. As most all of the nations are operated by tax, governments will not permit the free trade of electronic currency which is operated outside of taxation system. Actually, the China Central Bank announced that as the bitcoin is not a genuine currency, it cannot have a legal status. They also said that any financial institution or company cannot put a price of bitcoin and guarantee products that related to bitcoin. South Korea government also stated that the bitcoin is a product which cannot be protected by Korean laws. Because the bitcoin has a possibility to be abused in many ways. It is against the Korean real–name financial system and can be used as a money laundering. Obviously, the bitcoin is one of the new flows in international business. However, it has many limits to be a substitute for real currencies. Economy cannot be detached
  • 132. ... Get more on HelpWriting.net ...
  • 136. Chap021 Essay Chapter 21: International Finance Multiple Choice Questions EXCHANGE RATES: THE GLOBAL LINK 1. The exchange rate is the: A) Opportunity cost at which goods are produced domestically. B) Balance–of–trade ratio of one country to another. C) Price of one country's currency expressed in terms of another country's currency. D) Amount of currency that can be purchased with 1 ounce of gold. Answer: C Type: Complex Understanding Page: 437 2. An exchange rate is: A) Always fixed. C) The price of one currency in terms of another. B) Tied to the price of gold. D) All of the above. Answer: C Type: Basic Understanding Page: 437 FOREIGN–EXCHANGE MARKETS 3. The U.S. demand for foreign currency ... Show more content on Helpwriting.net ... dollars and a demand for a foreign currency. C) Demand for U.S. dollars and a supply of a foreign currency. D) Demand for U.S. dollars and a demand for a foreign currency. Answer: B Type: Basic Understanding Page: 437 13. Changes in the value of the euro affect the economies of: A) Only those countries using the euro as currency. B) All European countries but there would be no significant impact on countries outside Europe. C) Potentially the entire world. D) There would be no significant impact on any economies as long as exchange rates are flexible. Answer: C Type: Basic Understanding Page: 437 14. When the exchange rate between the U.S. dollar and the Japanese yen is $1=100 yen, this is an indication that: A) It would take 100 yen to purchase $1. C) The dollar is depreciating compared to
  • 137. the yen. B) The yen is stronger than the U.S. dollar. D) All of the above. Answer: A Type: Basic Understanding Page: 438 15. A change in the exchange rate for a country's currency alters the prices of: A) Exports only. C) Both exports and imports. B) Imports only. D) Only domestic goods and services. Answer: C Type: Basic Understanding Page: 438 16. An increase in the price of the U.S. dollar in terms of euros will cause, ceteris paribus: A) A lower European inflation rate. B) Higher interest rates in the United States. C) European goods to be cheaper to residents of the United States. D) All of the ... Get more on HelpWriting.net ...
  • 141. The Price Of Everything Raises Essay Topic Paper "The price of everything raises and falls from time to time and place to place; and with every such change the purchasing power of money changes so far as that thing goes" (Alfred Marshall). As a consumer, buying a product or service is a choice we have, different elements affect that choice. We might not realize all those outside factors at the time of purchase, but as Alfred Marshall said, prices are always changing, affecting our spending. One of those outside factors is the foreign exchange market. "The foreign exchange market spans the globe, with prices moving and currencies trading somewhere–every hour of every business day" (Eiteman, Stonehill, & Moffett, 2016, p. 119). What does this mean to consumers? It depends on whether the U.S. dollar appreciates or depreciates. Having a strong U.S. dollar is better for consumers than a weak U.S. dollar because it increases the value of the U.S. dollar, increases traveling, and gives consumers more purchasing options. As the result of the U.S. dollar appreciating, consumer's U.S. dollar has more worth compared to other currencies. The foreign exchange rate "is the price of one currency expressed in terms of another currency" (Eiteman, Stonehill, & Moffett, 2016, p. 129). Let us take for example the U.S. dollar and the Mexican peso and define foreign exchange quotes. I recently traveled to Mexico City (September 21) and Puebla (September 23), in both location making foreign exchange transactions. As stated ... Get more on HelpWriting.net ...
  • 145. The Major Cornerstone For The U.s.'s Economic Prosperity... As the major cornerstone for the U.S.'S economic prosperity and international hegemony, following the change of the Bretton Woods System to the Petrodollar system in 1971; I 've found the largest independent factor to influence American international interests has been the implementation and preserva The Petrodollar System From the Gold Standard To Black Gold By: Gibson J.T. Intro Behind the global power of the U.S. dollar, hides the most significant form of currency you 've probably never heard of, the Petrodollar. The word "Petrodollar" was coined by the Egyptian economist Ibrahim Oweiss, as a way to describe how oil producing and exporting countries were accounting for oil units outside of the regular money supply. While the Petrodollar may not be a commonly used term, I would agree with Economist Jerry Robinson when describing it as, "the most brilliant [series of] political–economic moves in recent history... [being] the fabric that holds our [U.S.] economy together". As the major cornerstone for the U.S.'S economic prosperity and international hegemony, following the change of the Bretton Woods System to the Petrodollar system in 1971; I 've found the largest independent factor to influence American international interests has been the implementation and preservation of the Petrodollar. Petroleum politics have been an increasingly important aspect of diplomacy since the rise of the Petroleum industry in the middle east in the early 20th century. The U.S. ... Get more on HelpWriting.net ...
  • 149. Quiz: United States Dollar and Best Practices Strategic Thinking – Quiz 1 1. The market for private–label athletic footwear is projected to grow 2. a.4–6% annually in all 4 regions during the Year 11–Year 20 period. 3. b.10% annually in all four geographic regions during the Year 11–Year 15 period and 8.5% annually in all four regions during the Year 16–Year 20 period. 4. c.8% annually in all four geographic markets during Years 11–15, and then slow gradually to 3% annually in all markets by Year 20. 5. d.10% annually in North America and Latin America during the Year 11–Year 20 period and 12% annually in Europe–Africa and the Asia–Pacific during the Year 11–Year 20 period. e.10% annually in North America and Latin America during the Year 11–Year 20 period and ... Show more content on Helpwriting.net ... e.tariffs of $6 per pair and shipping fees of $2 per pair. 11. Which of the following best describes the materials the company uses to make its footwear? a.Normal–wear and long–wear materials b.Standard and superior materials c.Natural and man–made materials d.Synthetic fibers, waterproof polyesters, microfibers, rubber, and metal eyelets e.Durable and non–durable materials 12. In Year 11, footwear companies can expect to sell a.no less than 3.8 and no more than 5.3 million branded pairs and no less than 750,000 and no more than 1.1 million private–label pairs. b.between 7 and 8 million branded pairs and 250,000 and 500,000 private–label pairs. c.an average of 4.84 million branded pairs and an average of 800,000 private–label pairs, although sales at some companies may run higher or lower than the averages due to differing levels of competitive effort. d.exactly 5.244 million branded pairs and 600,000 private–label pairs. e.exactly 4.844 million branded pairs and 800,000 private–label pairs . 13. The reject rates at the company 's footwear plants are a function of a.workers ' total 14. compensation package, the number of plants, and the installation of upgrade option D. b.the size of the incentive payment per non–defective pair produced, spending for best practices training, spending for TQM/Six Sigma quality control, the ... Get more on HelpWriting.net ...
  • 153. Understanding Exchange Rates Understanding Exchange Rates Section I – Introduction Section II – Definitions and Examples Section III – Systems and History Section IV – Government Interventions and their Effects Section V – Effects of the Exchange Rate on International Trade Relationships Section VI – Other Related International Trade Considerations Section VII – Conclusion Section I – Introduction Understanding the relationships among world currencies is vital to successful operations in a global economy. There is money to be made by managers who can effectively manage exchange rates in the course of their business dealings. There is money to be lost by managers who fail to recognize the significance of these rate relationships. In an effort to better ... Show more content on Helpwriting.net ... If the 3–month expected rate is accurate, I can return to the exchange in three months with only 1.2 Canadian dollars and get my 1 U.S. dollar back. That leaves me with 10 Canadian cents profit. It may not seem worthwhile to wait three months to gain 10 cents profit. Consider however, if I had 1 million U.S. dollars to invest. I could return in three months, make my trade and gain 100,000 Canadian dollars. These rates also offer corporations opportunities for profit as they can order items expecting to pay when the exchange rate has changed in their favor. Let's consider an American company operating in France. The company's accounting statements are kept in U.S. dollars. The company orders equipment from a French supplier that is expected to cost 85,000 French francs. If the company pays for the equipment now, the books will indicate a cost of 100,000 U.S. dollars. If the company waits
  • 154. for the equipment to arrive and pays for the equipment in three months, the cost will be over 106,000 U.S. dollars. This is known as hedging – using the expected exchange rate to increase profits or reduce losses by timing monetary exchanges. Section II – Systems and History This sounds a little like guesswork and gambling, but there is more to it than what appears on the surface. The exchange rates are set by government agencies in each country. In the United States, most of us have become accustomed to waiting for word from Alan Greenspan about changes in ... Get more on HelpWriting.net ...
  • 158. Global Financing and Rate Essay Global Financing and Exchange Rate Mechanisms Veronica L. Powell University of Phoenix MGT/448 Donald Joseph March 31, 2009 Global Financing and Exchange Rate Mechanisms Currency is unreliable. In some countries the United States dollar is worth more than that countries currency, while in other countries the U.S. dollar is worth less. The exchange rate fluctuates on a continuous base which makes the term "funny money" more realistic each day. The purpose of this paper is to discuss hard and soft currency, the South African rand, Cuban pesos, and why the exchange rates fluctuate. Hard currency is a currency, usually from a highly industrialized country, that is largely accepted globally as a form of ... Show more content on Helpwriting.net ... The rand is a parallel currency that was exclusively used for nonresident capital movements during the 1980s and 1990s. The financial rand was available to foreigners for investment only in South Africa was formulated by the sale of nonresidents' assets in the country (Country Data, 1996). The two–tiered currency system insulated the country's foreign reserves from politically stimulated capital flight, because all divestment by nonresidents were automatically met by new investment, and the price of the financial rand varied independently of the commercial rand (Country Data, 1996). Ultimately, South Africa's economic growth depends upon increasing gold profits and foreign investments. The Cuban Pesos (CUP) is the official currency in Cuba. The American dollar is not accepted on government business in Cuba since November 2004. All of the stores that sold goods in American currency changed to the Cuban Convertible Pesos (CUC). Pesos convertibles cost the equivalent of $1.18 United States Dollars (USD). In Cuba, currency is exchanged every day, and it is a known fact
  • 159. that the pesos are unstable. The Cuban Pesos is equivalent to 100 cents (centavos). The notes can be of the following denominations: 1, 3, 5, 10, 20, 50, and 100 pesos; coins can be of 1, 5, and 20 centavos (Cuba Currency, 2005). ... Get more on HelpWriting.net ...