(solved) Assignment on International Trade

Added on - 27 Jan 2020

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International trade1
TABLE OF CONTENTSINTRODUCTION..........................................................................................................................31........................................................................................................................................................3a....................................................................................................................................................3b....................................................................................................................................................32........................................................................................................................................................4a....................................................................................................................................................4b....................................................................................................................................................4c....................................................................................................................................................43........................................................................................................................................................44........................................................................................................................................................5a....................................................................................................................................................5b....................................................................................................................................................5c....................................................................................................................................................65........................................................................................................................................................6a....................................................................................................................................................6b....................................................................................................................................................6c....................................................................................................................................................6CONCLUSION...............................................................................................................................7REFERENCES................................................................................................................................82
INTRODUCTIONInternational trade is referred to exchange of goods as well as services among thecountries. Such kind of trade results in giving rise to world economy under which prices, supplyand demand affects and are influenced by events at global level. International trade allowsgreater competition and more competitive pricing within the market.1.a.The statement that is a country deciding to join monetary union expects an increasedability to stabilize output, and an increased ability in lowering inflation in comparison with initialability under flexible exchange rate is false. This is because with single currency monetaryefficiency is enhanced as it is accepted everywhere thus has more utility. However when countryfixes its exchange rate then it loses control over its own monetary policy. Therefore economicstability is sacrificed (Manova, 2013). Floating exchange rate is more beneficial in comparisonwith fixed as with this economy's output increases and output as well. Countries possessing theirown exchange rates results in shifting output of goods exported that has impact on exchangerates. On the contrary with fixed rates there is limited ability of government to stabilize economyas the state loses control over its monetary policy.b.US authorities have committed exchange an ounce of gold for $35. However Frenchauthorities have committed exchange an ounce of gold for 60 French francs. Calculation ofexchange rate demonstrated below:$35 = 1 ounceFF60 = 1 ounce$35 = FF60$ = FF60/ 35$ = FF1.71Thus exchange rate is FF1.71/ 1$3
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