In determining which goods to import from which country and which goods to export, I encountered some of the advantages and some limitations of the international trade. According to the theory of comparative advantage, a country should specialize in the production and export of commodities that it can produce at a lower opportunity cost than other countries while it should import commodities that are produced at a lower opportunity cost than other countries. Limitations such as imposing a quota or tariff can raise the price of products and lead to a loss in consumer surplus or cause retaliation from the country therefore reducing the goods a country is able to export. There are factors that influence the foreign exchange rate which also has an impact on a country’s importing and exporting. Regardless of these things, international trade is important to a countries
Factors like the strength of the economy, activities of international investors, and foreign trade all have something to do with the change in supply and demand. Given the size and mobility, the flow of capital is a determining factor of how the exchange rates will comply. Once the influences mentioned above affect the interest rates, the exchange rates among the market determined currencies are also influenced because currencies are extremely vulnerable to changes in interest rates and sovereign risk factors. The key drivers of an exchange rate stem from international capital and trade flows, the interest rate differentials net of expected inflation, trading activities in other currencies, monetary policy and central banks, and financial and political stabilities. If local prices in a country increase more than prices in another country for the same product; being is that foreign exchange forward markets are linked to interest markets; then the local currency may decline in value via its foreign counterpart, presuming there is no change with the structural relationship between the two.
Money has four major functions and medium of exchange is what the nation uses the most in current economy. Medium of exchange is where seller accepts money in exchange of goods and services. The central bank manages nation’s monetary system by selling government bonds in the open-market to maintain control of supply and demand of money. Economic recovery is the stated direction of the recent monetary policy in the United States. Interest rates can effect economy’s production and
Currency risk- if unexpected changes in currency values affect the value of the firm 4. Identify and describe the ways in which a US company can participate in international commerce. 5. The price of a currency forward contract is determined by the relationship between interest rates of the two countries in question and the time period covered by the contract. Is this statement exactly true, partly true or false?
Identify and describe the ways in which a US company can participate in international commerce. 5. The price of a currency forward contract is determined by the relationship between interest rates of the two countries in question and the time period covered by the contract. Is this statement exactly true, partly true or false. Explain your response.
Contrast the pros and cons of protectionist policies. A: Governments utilize protectionist economic policies to restrict imports and exports. Protectionism helps to protect nations from an increase in the amount of imports, which could affect domestic production. One of the most common protectionist policies includes raising the price of imports via tariffs, keeping industry in the nation more competitive in the domestic market. Protectionism can also include import quotas, or the restrictions on the quantity of imports allowed to enter a country.
The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called? B) International trade phase ✔ 5. The author describe the multinational phase of globalization for a firm as one characterized by the______? C) Ownership of assets and enterprises in foreign countries. ✔ 6.
and Global Economics Core (S1225782) Review Name: ____________________ Date: ____________ Key Terms absolute advantage autarky balance of trade boycott brain drain capital flight capital mobility colonizlization comparative advantage conditionality consensus containerization developed developing economic development economic sanctions foreign aid foreign direct investment foreign exchange reserves foreign investment globalization human rights infrastructure insourcing interdependence International Monetary Fund international trade migration offshoring opportunity cost outsource outsourcing portfolio investment protectionist specialization standard of living sustainable development terrorism trade deficit trade embargo trade sanction trade war transparency World Trade Organization Lesson One: It's a Small World Lesson Objectives Explain how international trade allows countries to specialize. List the advantages of dividing labor internationally. Describe and calculate the effects of specialization on workers, particularly on wages, and on production costs, particularly for labor. 30 of 39 2/10/11 10:16 AM Printable Documents
Spanish Viceroyalties vs. English Colonies Both the economy of Spanish viceroyalties in Latin America and that of the English colonies were mercantilistic. However, their political and social systems differed in that the Spanish states had an elaborate bureaucracy while the British colonies elected colonial assemblies, and the social distinctions in the Spanish viceroyalties were more complex than those of the British colonies. Both the Spanish and English colonies had economies based on mercantilism. Mercantilism, the prevailing economic ideology in Europe at the time, stated that the relationship between colonies and their mother country is for the benefit of the mother country. Using the mercantilist system, the governments of Spain and England intervened in the trade of their respective colonies constantly in order to gain wealth.
2. Companies in some countries obtaining unfair commercial advantages from the use of particular national accounting standards. 3. The complications in negotiating commercial arrangements for international joint ventures caused by different accounting requirements. 4.