Purchasing power parity theory of exchange rate determination essay

Purchasing power parity theory of exchange rate determination essay

Purchasing power parity theory of exchange rate determination essay

6008 assessment 5

  • International Trade: Economic Analysis

Overview

In 3–4 pages, analyze the concept of exchange rate and explain the purchasing power parity theory of exchange rates. Explain why a quota is more detrimental to an economy than a tariff.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 2: Analyze the impact of macroeconomic principles, theories, policies, and tools in real world business situations.
    • Analyze the concept of exchange rate.
    • Explain the purchasing-power-parity theory of exchange rates.
    • Explain why a quota is more detrimental to an economy than a tariff.
  • Competency 4: Communicate in a manner that is professional and consistent with expectations for members of the business professions.
    • Correctly format citations and references using current APA style.
    • Write content clearly and logically with correct use of grammar, punctuation, and mechanics.

Context

Globalization and international trade play a very important role in today’s highly interconnected global economy. There are a series of economic relationships that affect the world economies through the exchange of goods and services, international investing through multinational corporations, and interconnected financial markets.

Questions to Consider

As you prepare to complete this assessment, you may want to think about other related issues to deepen your understanding or broaden your viewpoint. You are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of your professional community. Note that these questions are for your own development and exploration and do not need to be completed or submitted as part of your assessment.

  • What is your level of knowledge with regard to free trade?
  • How does free trade impact (both negatively and positively) the country’s economy?

Resources

Suggested Resources

The resources provided here are optional and support the assessment. They provide helpful information about the topics in this unit. You may use other resources of your choice to prepare for this assessment; however, you will need to ensure that they are appropriate, credible, and valid. The MBA-FP6008 – Global Economic Environment Library Guide can help direct your research. The Supplemental Resources and Research Resources, both linked from the left navigation menu in your courseroom, provide additional resources to help support you.

International Trade Theory and Principles

The resources below provide information about international trade theory and principles.

  • Van Bergen, J. (2016). 6 factors that influence exchange rates. Retrieved from http://www.investopedia.com/articles/basics/04/050704.asp
  • Callen, T. (2012). Purchasing power parity: Weights matter. Retrieved from http://www.imf.org/external/pubs/ft/fandd/basics/ppp.htm
  • Dutta, N. (2016). Difference between tariff and quotas. Retrieved from http://www.economicsdiscussion.net/difference-between/difference-between-tariff-and-quotas-with-diagram/6437
  • McConnell, C., Flynn, S., & Brue, S. (2015). Macroeconomics (20th ed.). New York, NY: McGraw-Hill Education.
    • Chapter 20, “International Trade,” pages 442–466.
    • Chapter 21, “The Balance of Payments, Exchange Rates, and Trade Deficits,” pages 470–489.
  • Assessment Instructions

Requirements

This assessment has two parts. Be sure to complete both parts before submitting.

Part 1

  • Analyze the concept of exchange rate.
    • Explain how the dollar price of euros is determined.
    • Identify a factor that can increase the dollar price of euros.
    • Identify a factor that can decrease the dollar price of euros.
    • Explain why a rise in the dollar price of euros means a fall in the euro price of dollars.
  • Explain the purchasing power parity theory of exchange rates, using the euro-dollar exchange rate as an example.

Part 2

  • Explain why a quota is more detrimental to an economy than a tariff that results in the same level of imports as the quota.
    • What is the net outcome of either tariffs or quota for the world economy?

Organize your assessment logically with appropriate headings and subheadings. Support your work with at least 3 scholarly or professional resources and follow APA guidelines for your citations and references. Be sure you include a title page and reference page.

Additional Requirements

  • Include a title page and reference page.
  • Number of pages: 3–4, not including title page and reference page.
  • Number of resources: At least 3.
  • APA format for citations and references.
  • Font and spacing: Times New Roman, 12 point; double-spaced.

6008 assessment 5

  • International Trade: Economic Analysis 5

Overview

In 3–4 pages, analyze the concept of exchange rate and explain the purchasing power parity theory of exchange rates. Explain why a quota is more detrimental to an economy than a tariff.

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and assessment criteria:

  • Competency 2: Analyze the impact of macroeconomic principles, theories, policies, and tools in real world business situations.
    • Analyze the concept of exchange rate.
    • Explain the purchasing-power-parity theory of exchange rates.
    • Explain why a quota is more detrimental to an economy than a tariff.
  • Competency 4: Communicate in a manner that is professional and consistent with expectations for members of the business professions.
    • Correctly format citations and references using current APA style.
    • Write content clearly and logically with correct use of grammar, punctuation, and mechanics.

Context

Globalization and international trade play a very important role in today’s highly interconnected global economy. There are a series of economic relationships that affect the world economies through the exchange of goods and services, international investing through multinational corporations, and interconnected financial markets.

Questions to Consider

As you prepare to complete this assessment, you may want to think about other related issues to deepen your understanding or broaden your viewpoint. You are encouraged to consider the questions below and discuss them with a fellow learner, a work associate, an interested friend, or a member of your professional community. Note that these questions are for your own development and exploration and do not need to be completed or submitted as part of your assessment.

  • What is your level of knowledge with regard to free trade?
  • How does free trade impact (both negatively and positively) the country’s economy?

Resources

Suggested Resources

The resources provided here are optional and support the assessment. They provide helpful information about the topics in this unit. You may use other resources of your choice to prepare for this assessment; however, you will need to ensure that they are appropriate, credible, and valid. The MBA-FP6008 – Global Economic Environment Library Guide can help direct your research. The Supplemental Resources and Research Resources, both linked from the left navigation menu in your courseroom, provide additional resources to help support you.

International Trade Theory and Principles

The resources below provide information about international trade theory and principles.

  • Van Bergen, J. (2016). 6 factors that influence exchange rates. Retrieved from http://www.investopedia.com/articles/basics/04/050704.asp
  • Callen, T. (2012). Purchasing power parity: Weights matter. Retrieved from http://www.imf.org/external/pubs/ft/fandd/basics/ppp.htm
  • Dutta, N. (2016). Difference between tariff and quotas. Retrieved from http://www.economicsdiscussion.net/difference-between/difference-between-tariff-and-quotas-with-diagram/6437
  • McConnell, C., Flynn, S., & Brue, S. (2015). Macroeconomics (20th ed.). New York, NY: McGraw-Hill Education.
    • Chapter 20, “International Trade,” pages 442–466.
    • Chapter 21, “The Balance of Payments, Exchange Rates, and Trade Deficits,” pages 470–489.
  • Assessment Instructions

Requirements

This assessment has two parts. Be sure to complete both parts before submitting.

Part 1

  • Analyze the concept of exchange rate.
    • Explain how the dollar price of euros is determined.
    • Identify a factor that can increase the dollar price of euros.
    • Identify a factor that can decrease the dollar price of euros.
    • Explain why a rise in the dollar price of euros means a fall in the euro price of dollars.
  • Explain the purchasing power parity theory of exchange rates, using the euro-dollar exchange rate as an example.

Part 2

  • Explain why a quota is more detrimental to an economy than a tariff that results in the same level of imports as the quota.
    • What is the net outcome of either tariffs or quota for the world economy?

Organize your assessment logically with appropriate headings and subheadings. Support your work with at least 3 scholarly or professional resources and follow APA guidelines for your citations and references. Be sure you include a title page and reference page.

Additional Requirements

  • Include a title page and reference page.
  • Number of pages: 3–4, not including title page and reference page.
  • Number of resources: At least 3.
  • APA format for citations and references.
  • Font and spacing: Times New Roman, 12 point; double-spaced.

88 thoughts on “Purchasing power parity theory of exchange rate determination essay”

  1. Thank you for all of the efforts on this site. My mother really likes making time for research and it is obvious why. A number of us notice all of the compelling means you offer very important guidance via your web site and as well improve response from some other people about this matter while our favorite simple princess is really understanding a great deal. Take pleasure in the remaining portion of the new year. You are conducting a glorious job.

  2. My brother suggested I might like this blog. He was totally right. This post actually made my day. You can not imagine just how much time I had spent for this information! Thanks!

  3. I love your blog.. very nice colors & theme. Did you create this website yourself? Plz reply back as I’m looking to create my own blog and would like to know wheere u got this from. thanks

  4. Please let me know if you’re looking for a author for your site. You have some really good posts and I feel I would be a good asset. If you ever want to take some of the load off, I’d really like to write some material for your blog in exchange for a link back to mine. Please shoot me an email if interested. Many thanks!

  5. Whats Taking place i am new to this, I stumbled upon this I have found It positively useful and it has helped me out loads. I’m hoping to give a contribution & aid different customers like its aided me. Good job.

  6. I like this site so much, saved to bookmarks. “Respect for the fragility and importance of an individual life is still the mark of an educated man.” by Norman Cousins.

  7. It’s actually a cool and useful piece of info. I’m glad that you shared this helpful info with us. Please keep us informed like this. Thanks for sharing.

  8. Thanks for sharing excellent informations. Your website is very cool. I am impressed by the details that you¦ve on this web site. It reveals how nicely you understand this subject. Bookmarked this web page, will come back for more articles. You, my friend, ROCK! I found just the information I already searched everywhere and just could not come across. What a great website.

  9. Hello, Neat post. There’s a problem together with your website in internet explorer, could test this… IE nonetheless is the market chief and a large part of other folks will pass over your excellent writing due to this problem.

  10. Great beat ! I would like to apprentice even as you amend your website, how can i subscribe for a blog website? The account aided me a applicable deal. I were a little bit familiar of this your broadcast provided shiny clear concept

  11. This web site can be a stroll-through for the entire data you wished about this and didn’t know who to ask. Glimpse here, and you’ll positively discover it.

  12. I’m not sure the place you are getting your information, however great topic. I needs to spend some time finding out much more or working out more. Thanks for excellent information I used to be in search of this information for my mission.

  13. I was suggested this website by my cousin. I am not sure whether this post is written by him as nobody else know such detailed about my trouble. You’re wonderful! Thanks!

  14. Nice read, I just passed this onto a colleague who was doing a little research on that. And he just bought me lunch as I found it for him smile Therefore let me rephrase that: Thanks for lunch! “Whenever you have an efficient government you have a dictatorship.” by Harry S Truman.

  15. I got what you intend, appreciate it for putting up.Woh I am pleased to find this website through google. “Since the Exodus, freedom has always spoken with a Hebrew accent.” by Heinrich Heine.

  16. I have read several good stuff here. Certainly worth bookmarking for revisiting. I surprise how much effort you put to create such a great informative web site.

  17. Wonderful beat ! I wish to apprentice at the same time as you amend your website, how could i subscribe for a blog website? The account helped me a acceptable deal. I had been tiny bit familiar of this your broadcast provided brilliant clear concept

  18. Good day very cool site!! Guy .. Beautiful .. Wonderful .. I’ll bookmark your site and take the feeds additionallyKI am glad to seek out numerous helpful info here within the submit, we want develop extra strategies on this regard, thank you for sharing. . . . . .

  19. Hi, Neat post. There’s an issue together with your website in web explorer, would test this?K IE still is the market chief and a big section of other people will omit your wonderful writing because of this problem.

  20. Hi there! This post couldn’t be written any better! Reading through this post reminds me of my previous room mate! He always kept talking about this. I will forward this article to him. Pretty sure he will have a good read. Thank you for sharing!

  21. Definitely believe that which you said. Your favorite justification appeared to be on the web the easiest thing to be aware of. I say to you, I certainly get irked while people think about worries that they plainly do not know about. You managed to hit the nail upon the top as well as defined out the whole thing without having side effect , people could take a signal. Will probably be back to get more. Thanks

  22. What Is LeanBiome?LeanBiome is a natural weight loss supplement that reverses bacterial imbalance in your gut microbiome with the help of nine science-backed lean bacteria species with Greenselect Phytosome, a caffeine-free green tea extract crafted with patented

  23. Definitely imagine that that you stated. Your favorite justification appeared to be at the internet the easiest thing to take into accout of. I say to you, I certainly get annoyed while folks consider worries that they plainly don’t realize about. You managed to hit the nail upon the top and also defined out the whole thing without having side effect , people can take a signal. Will probably be again to get more. Thanks

  24. I’ll immediately clutch your rss as I can not to find your email subscription link or newsletter service. Do you’ve any? Kindly let me realize so that I could subscribe. Thanks.

  25. Great amazing issues here. I am very satisfied to look your article. Thanks a lot and i am looking ahead to touch you. Will you please drop me a e-mail?

  26. I precisely had to say thanks once again. I do not know what I would have carried out without those tricks documented by you over my subject matter. It had become a real frightful case in my position, however , spending time with the well-written mode you dealt with that took me to cry with happiness. I am thankful for the advice as well as wish you comprehend what a powerful job that you are accomplishing educating people today by way of your websites. Most likely you haven’t encountered any of us.

  27. Tonic Greens: An Overview Introducing Tonic Greens, an innovative immune support supplement meticulously crafted with potent antioxidants, essential minerals, and vital vitamins.

  28. I am only writing to make you understand of the amazing experience our child developed browsing the blog. She mastered lots of pieces, most notably what it is like to have an awesome teaching heart to have the others with no trouble know chosen tricky subject matter. You truly surpassed people’s desires. Thanks for giving these priceless, trustworthy, educational and cool tips on your topic to Lizeth.

  29. Hey There. I discovered your weblog using msn. That is a really smartly written article. I’ll make sure to bookmark it and return to learn extra of your helpful information. Thank you for the post. I will certainly comeback.

  30. The next time I read a blog, I hope that it doesnt disappoint me as much as this one. I mean, I know it was my choice to read, but I actually thought youd have something interesting to say. All I hear is a bunch of whining about something that you could fix if you werent too busy looking for attention.

  31. An interesting discussion is worth comment. I think that you should write more on this topic, it might not be a taboo subject but generally people are not enough to speak on such topics. To the next. Cheers

  32. I beloved up to you’ll obtain performed proper here. The comic strip is attractive, your authored subject matter stylish. however, you command get bought an nervousness over that you wish be handing over the following. in poor health definitely come further until now once more as exactly the same just about a lot continuously inside case you shield this increase.

  33. Hiya, I am really glad I’ve found this info. Nowadays bloggers publish only about gossips and net and this is really frustrating. A good blog with exciting content, that’s what I need. Thanks for keeping this site, I’ll be visiting it. Do you do newsletters? Can’t find it.

  34. I’d have to examine with you here. Which is not one thing I usually do! I take pleasure in reading a post that may make folks think. Additionally, thanks for permitting me to comment!

  35. I would like to thnkx for the efforts you have put in writing this website. I am hoping the same high-grade blog post from you in the upcoming also. Actually your creative writing abilities has encouraged me to get my own blog now. Actually the blogging is spreading its wings fast. Your write up is a good example of it.

  36. Heya i’m for the primary time here. I found this board and I to find It really useful & it helped me out much. I hope to present something back and aid others like you helped me.

  37. Thanks for sharing superb informations. Your website is very cool. I am impressed by the details that you’ve on this web site. It reveals how nicely you understand this subject. Bookmarked this web page, will come back for extra articles. You, my friend, ROCK! I found simply the info I already searched all over the place and just could not come across. What an ideal web-site.

  38. Admiring the hard work you put into your website and in depth information you present. It’s great to come across a blog every once in a while that isn’t the same unwanted rehashed information. Wonderful read! I’ve saved your site and I’m including your RSS feeds to my Google account.

  39. Wonderful website you have here but I was wanting to know if you knew of any discussion boards that cover the same topics discussed in this article? I’d really like to be a part of group where I can get comments from other experienced people that share the same interest. If you have any suggestions, please let me know. Bless you!

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top