International Trade Simulation and Report

1965 Words8 Pages
International Trade Simulation and Report

ECO-212 Principles of Economics - Robert Coates

University Of Phoenix

Faithlyn Wright, Trina Drinka, David Barrett,

Amber Kemper, Josue Garcia

July 11, 2010.

Advantage and Limitation of International Trade

International Trade is important to many countries because it allows a country to import products or resources that may be difficult to produce locally. As a result, this enhances the country’s growth and economic wealth, and also allows the country to focus on increasing the production of resources or goods that the country can then export elsewhere. For example, in the simulation, Rodamia produces both corn and cheese, but they have a comparative advantage in
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There are various factors that cause the fluctuation in the rates of exchange;

International trade affects the value of a currency, particularly through how much export or imports a nation may have, countries selling so many goods and services to others, tend to appreciate their Forex standards and those importing highly normally have their currency fall in value since they are spending more to their trading partners than they gain from them. Political and psychological factors are believed to have an influence on exchange rates. Many currencies have a tradition of behaving in a particular way for e.g. Swiss franc as a refuge currency. The US Dollar is also considered a safer haven currency whenever there is a political crisis anywhere in the world. Speculation normally affects the currency value when there is belief that a particular economy is 'over heating ' and that soon there will be devaluation, then chances are high that, speculators will pull out their monies, causing there to be more supply than demand on the Forex for that particular currency, hence its depreciation.

World Trade Organization

The World Trade Organization (or “WTO”) is a multi-national cooperative organization that provides a forum in which to discuss international trade. Member-nations agree to abide by rules decided through the WTO, and in return are allowed to vote on changes to those rules,
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