Consider two cases: in the first case, the country’s exchange rate appreciates.
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First, re-read Chapter 18 Section 3 in Principles of Macroeconomics.
Next, choose a developing country, and the country you selected, find the exchange rate of your country by:
Go to the FRED Economic Data main page, at FRED Economic Data.
Move your mouse pointer so that it is over the search bar
Now to search in the exchange rate, write the name of the country and the word “exchange rate”. Make sure you select foreign currency per US Dollar format. For example, if your country is China, you will select Yuan per US Dollar, not US Dollar per Yuan.
Next, answer the following questions in your initial post:
Discuss the relation between inflation and the exchange rates using purchasing power parity theory. What happens to the exchange rate of the country you have chosen when the overall prices of the country increase? Consider the bilateral exchange rate between the country and the US dollar (foreign currency/USD).
Discuss the relationship between exchange rates and international business. Consider two cases: In the first case, the country’s exchange rate appreciates. In the second case, the country’s exchange rate depreciates. What is the impact of appreciation and depreciation of the exchange rate on the country’s international trade for both of the cases?
Explain how this developing country could use exchange rates to benefit economic development. Discuss with the use of one real-life example.
DirectionsMake your initial post by Thursday 11:00 pm this week and comment on at least two of your classmates’ posts by Sunday 11:00 pm.
Post your response to the discussion and then read your classmates’ posts. Post a response to at least two of your classmates’ posts. Your initial post should be no less than 150 words and no more than 300 words. Your reply post should be no less than 75 words.
Discussions need to be professional. Please make proper use of capitalization and punctuation and make sure that there are no misspellings, incomplete sentences, or other grammatical errors.
The basic criterion for a discussion post to be considered effective is that your message is original and intelligible. You must communicate concisely and clearly.
