International Economic Concepts of Trade and Globalization

1 euro would cost about ✔ $1.28in US dollars. 1 euro could be exchanged for 119 ✔ Japanese yen.

$1.28 Japanese Yen

Value of US Dollar vs. Canadian Dollar In October 2012, one US dollar could buy about ✔ 0.98 Canadian dollars. The exchange rate remained unchanged from ✔ Dec. 2012 to Jan. 2013 The US dollar grew stronger against the Canadian dollar from ✔ Jan. 2013 to Mar. 2013 .

0.98 Dec. 2012. - Jan. 2013 Jan. 2012 - Mar. 2013

Which of these statements most accurately describes currencies in North America? All countries in North America use the US dollar. All countries in North America use the euro. North American countries have done away with separate currencies. Each country in North America uses its own currency.

Each country in North America uses its own currency.

If the value of the U.S. dollar rises or falls in relations to other currencies, how will the economy be affected? Rising Value : Prices of Foreign goods decrease. Fewer travelers come to the U.S. Exports decline

Falling Value : Imported goods are more expensive Demand increases for U.S. exports

Now, put it all together. Explain how a rise in currency value would affect a country's ability to import and export goods. Give your answer in at least two to three complete sentences.

If a country experiences a rise in value, it will trade at a higher exchange rate. This rise in value will cause the prices of exports to increase, so other countries may be less willing to buy these goods. At the same time, the rise in value will make it easier and cheaper to import goods.

The chart below shows an exchange rate table. What is the most likely conclusion that can be drawn about how this table would look in December 2013? It would look the same because exchange rate tables do not change. It would look different because exchange rate tables change constantly. It would look different because exchange rate tables change once a month. It would look different because more countries will have started to use euros.

It would look different because exchange rate tables change constantly.

Value of US Dollar vs. Canadian Dollar Think about financial transactions between US citizens and Canadians during the period shown. Canadian money had the strongest buying power in October US money had the strongest buying power in ✔ March .

October March

According to the graph, when would have been the best time for an American to buy a piece of machinery manufactured in Canada? Explain your answer in at least two complete sentences.

The best time to buy an imported good, such as machinery manufactured in Canada, is when you can buy the most Canadian dollars for your US dollars. According to the chart, rates were most favorable in March 2013. At that time, $1 could buy about 1.03 Canadian dollars.

Which statements accurately describe a country's currency? Select all that apply. The currency is easily divisible. The currency can be used in any other country. The currency has a value that can change. The currency has denominations. The currency has a value that must stay the same.

The currency is easily divisible. The currency has a value that can change. The currency has denominations.

Which statements accurately describe a country's currency? Select all that apply. The currency is easily divisible. The currency can be used in any other country. The currency has a value that can change. The currency has denominations. The currency has a value that must stay the same.

The currency is easily divisible. The currency has a value that can change. The currency has denominations.

Sample Response: The best time to buy an imported good, such as machinery manufactured in Canada, is when you can buy the most Canadian dollars for your US dollars. According to the chart, rates were most favorable in March 2013. At that time, $1 could buy about 1.03 Canadian dollars. Which arguments did you include in your answer? Check all that apply. The most favorable exchange rates for an American were in March 2013. A US dollar could purchase the most Canadian dollars in March 2013. March 2013 would have been the best time to purchase the machinery.

The most favorable exchange rates for an American were in March 2013. A US dollar could purchase the most Canadian dollars in March 2013. March 2013 would have been the best time to purchase the machinery. The best time to buy an imported good, such as machinery manufactured in Canada, is when you can buy the most Canadian dollars for your US dollars. According to the chart, rates were most favorable in March 2013. At that time, $1 could buy about 1.03 Canadian dollars.

The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivar to the US dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the United States and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations. In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets to protect themselves from projected price increases What has the president of Venezuela done by devaluating the bolivar? allowed the exchange rate to be set by supply and demand artificially increased the number of bolivars needed to buy one US dollar artificially decreased the number of bolivars needed to buy one US dollar allowed the exchange rate to remain unchanged for the near future

artificially increased the number of bolivars needed to buy one US dollar

What caused the change in the yen's exchange rate? ✔ Demand decreased. According to this graph, how has the yen's exchange rate changed? ✔ It has fallen.

demand............. it has fallen

For this table, the reference currency is the ✔ euro. The exchange rate of the euro to the US dollar and most other currencies is determined by ✔ supply and demand. According to the chart, one euro would buy ✔ 1.2149 Swiss francs. It would cost ✔ 1.28 US dollars to buy one euro

euro supply and demand 1.2149 1.28

Each currency has a changing value relative to other currencies. This is referred to as a currency's _______. exchange rate currency value exchange value currency rate

exchange rate

Read this news report about a planned devaluation of the bolivar, the currency of Venezuela. The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivars to the dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the US and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations. In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets in order to protect themselves from projected price increases. By devaluating the bolivar, the president of Venezuela has followed the law of supply and demand. allowed the exchange rate to remain unchanged. increased the number of bolivars needed to buy one dollar. decreased the number of bolivars needed to buy one dollar.

increased the number of bolivars needed to buy one dollar.

The chart below shows an exchange rate table. If you lived in Great Britain and wanted to buy one euro, how much would it cost? less than a pound more than a pound exactly one pound about eight pounds

less than a pound.

The graph below shows the value of the US dollar versus the Canadian dollar. For the time period shown, the value of the US dollar was generally rising against the Canadian dollar. falling against the Canadian dollar. more than twice that of the Canadian dollar. about half that of the Canadian dollar.

rising against the Canadian dollar.

The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivar to the US dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the United States and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations. In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets to protect themselves from projected price increases What is the expected effect of the devaluation among Venezuela's population? rising inflation price deflation increased imports declining inflation

rising inflation

Read this news report about a planned devaluation of the bolivar, the currency of Venezuela. The president of Venezuela announced that the country would be devaluating the bolivar for the fifth time in nine years. The official rate is falling from 4.3 bolivars to the dollar, to 6.3, a 32% devaluation. By increasing the bolivar value of exports of oil to the US and other nations, the government hopes to alleviate a budget crisis caused by its increasing reliance on borrowing to meet spending obligations. In response to the announcement, the people of Venezuela lined up today to buy televisions, electronics, and airline tickets in order to protect themselves from projected price increases. Venezuelans started buying items immediately because of their fear of rising inflation. price deflation. declining inflation. increased imports.

rising inflation.

There would be no separation between one country's economy and another's if the entire world shared the same currency. chose paper currency over coins. eliminated denominations for currency. agreed to use only two types of currency.

shared the same currency.

What is a currency exchange rate? the money returned when a person overpays the amount of a currency needed to account for a rise in inflation the value of one currency in relation to another a series of currency fluctuations over a period of time

the value of one currency in relation to another

If investors can earn 10 percent interest in an account in Mexico but just 3 percent in the United States, those investors will most likely continue to invest in the United States and have no effect on the exchange rate. want to invest in Mexico and cause the exchange rate to rise. try to do anything possible to keep the exchange rate from changing. want to invest in Mexico, which will cause the peso to appreciate.

want to invest in Mexico and cause the exchange rate to rise.