EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Question
Chapter 33, Problem aFCT
To determine
Reason for economist’s judgement for the international prowess of a nation’s currency.
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Suppose country A’s goods become more popular with foreign consumers, and country B’s less so. How would this affect each country, assuming that they share a common currency? What are the pros or cons for each country?
Suppose that all economies in the world agreed to use a single currency that would be managed by an independent organization. What would the advantages and disadvantages of this be?
Explain how currencies of different nations are exchanged when international transactions take place.
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- In our pretend world there are two countries - Chile and Switzerland - that are engaged in trade. The firm Switzerland Chocolates Express sells Boxes of chocolate (a good) in Chile. Each Box of Chocolates sells for 6500 Chilean pesos in Chile. In Switzerland, each box of chocolates 11 Swiss Franc to produce. Assume that the firm has 1 million boxes of chocolate to sell. How much money (in Swiss Franc) would the firm make (or lose) on the sale at the following exchange rates: Rate 1: 550 Pesos per Swiss Franc Rate 2: 0.0015 Swiss Franc Per Chilean Pesoarrow_forwardExplain how companies can profit from currency exchange. What is this called?arrow_forwardDo all international financial transactions necessarily involve exchanging one nation’s distinct currency for another? Explain. Could a nation that neither imports goods and services nor exports goods and services still engage in international financial transactions?arrow_forward
- Maximizing currency conversion is one of the keys to success for international exposure. Which are the countries that have the highest and lowest monetary values? Briefly discuss the top 5 and lowest 5. Explain in 3 paragraphs please !arrow_forwardSuppose country A’s goods become more popular with foreign consumers, and country B’s less so. How would this affect each country, assuming that they have their own independent currency? What are the pros or cons for each country?arrow_forwardYou work for a Nova Scotia Company trying to successfully enter the cranberry market in Australia. Analyze the entry country (Australia) based on the following; What are the major exports, dollar value, and trends? What are the major imports, dollar value, and trends? Does the entry country have a surplus or deficit for trade? What are the exchange rates? Are there any restrictions on currency trade? You should also consider sweat shops, skilled labor, employee unrest, political and social activists and labor unions in your analysis.arrow_forward
- What events can ignite a currency crisis?arrow_forwardDo all international financial transactions involve exchanging one currency for another? Could a nation that neither imports nor exports goods and services still engage in international financial transactions? Explain: “U.S. exports earn supplies of foreign currencies that Americans can use to finance imports.”arrow_forwardWhat does it mean by the monetary approach to currency depreciation when pertaining to international economics?arrow_forward
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