When the demand for U.S. dollars increases, the value of the dollar will increase or appreciate (Stone 2008, pp. 685). As a result, U.S. products become more expensive for foriegners causing a reduction in exports and increasing imports. This not only effects the U.S. economy, but also affects the economies in other countries. Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability).
The basic ideas of the monetary policy and economic stabilization policy were foreign at the time, dating only from John Maynard Keynes' work in 1936 (Keynes, 2011). These rates influence financial conditions in the household and the ability to secure and spend more money. Short-term rates alter borrowing costs for firms, households, and the spending circulation cycle is affected. Movements in short-term directly affect long-term notes such as bonds and mortgages. These factors indicate current and future values of the short-term rates, therefore it creates issue with future long-term rates.
a. Opportunities: investment opportunities; enhancing revenues (global branding, marketing flexibility, advantages of scale and scope); reducing operating costs (low cost materials, labor, flexibility in global site selection, flexibility in sourcing and production, economies of scale and scope, economies of vertical integration); multinational business strategy (following the customer, leading the customer, following the leader, going local) b. Risks: differences in legal, accounting, and tax systems; differences in personnel management (i.e. HR practices); differences in marketing; differences in distribution; differences in financial markets; differences in corporate governance 2. Given the following Euro to $ Exchange rate of 1.46, what is the information contained in this quote?
Other things equal they prefer to pay more for stocks that are more risky and have uncertain cash flows. • Investors are risk averse. Other things equal they prefer to pay more for stocks that are less risky and that have relatively certain cash flows than other stocks. When determining the value of a firm, which of the following statements is ture? • A financial asset is considered to have value if it has the ability to generate positive cash flows.
SWOT ANALYSIS OF ATNT: (Slide is at the end of doc) STRENGTHS: * Geographically diverse business Geographically diverse business and revenue should help shield the business from shocks in any one part of their business. Different countries or locations around the world have different characteristics. Those characteristics do not always match; therefore, a company can lower their risk by investing in part of the world with low correlations. The lower the risk, the better. This lowers risk and increases the value of the business over the long-term.
Exports are the trade of goods and services between international economies. The macroeconomic performance of a country is measured by unemployment rate, which is targeted at 2.5%; inflation rate, which is targeted at 2.0% plus or minus 1% on the CPI; a satisfactory position on the balance of payments; and a stable economic growth rate, targeted at 2.5%. It is clear that an increase in exports would have an effect on an economies macroeconomic performance as it is a factor (balance of payment), but the extent to which can improve an economies macroeconomic performance is dependant on many other conditions. An increase in exports, may improve the economic performance of an economy, as it would reduce unemployment (the amount of people willing and able to work, but not in work). If exports were to increase this would result in an increase in AD, as the balance of payment is a factor.
Although the Sarbanes-Oxley Act was passed by Congress for positive reasons, there are many disadvantages that come along with it. A major issue is the cost of regulation, especially for smaller companies. Expanding internal controls delay the timeliness of financial statements by adding processing time to accounting functions. To follow the SOX, companies would need to separate duties, causing an increase in personnel. The SOX also calls for additional audits which increase business costs.
A more difficult and time consuming effort Huffman could take to reduce exchange rate risk is to spin the rate to your advantage (Prinzel, 2013). This means when USD exchange rates are high, Huffman would need to ensure their customers are aware of the benefits they could be receiving in discounts. Relative to Huffman Trucking’s benefit with this approach, they could buy foreign exchanges when rates are low, similarly taking advantage of the same benefits their customers would
If the interest rate is low, it will cause more funds to be available, greater expansion and increased employment. If the interest rate is high, it will cause fewer funds to be available, less expansion, and decreased employment. Fiscal policy is an important tool for managing the economy because of its ability to affect the total amount of output produced or the gross domestic product. The first impact of a fiscal expansion is to raise the demand for goods and services. This greater demand leads to increases in both output and prices.
However, there are advantages and disadvantages of international trade in the simulation that cause the world’s economy to fluctuate and leave certain countries astray. One of the advantages to international trade that I found for countries was the monetary gains and having the ability to keep their own markets honest causing the local producers to improve its goods for the reason citizens have more choices available to them. The disadvantages of international trade have to deal with countries of higher power that try to take advantage of smaller countries by swindling their government into unorthodox trading during a crisis within those countries. Another disadvantage is the possibility of local producers becoming weak, causing the unemployment rate to rise because local producers are unable to compete with international