Real Effective Exchange Rate, Broad Money Supply and Trade ...
Exchange rate and trade policy
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Exchange Rate
&Trade Policy
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Exchange
* means the charge for exchanging currency of one country for currency of another ( charge per unit )
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Trade Policy
* a government's policy controlling foreign trade ( open door policy )
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Balance Payment
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Balance Payment
* is a country's record of all transactions between its residents and the residents of all foreign nations.
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Official transactions account
* is a part of the balance of payments account that records the amount of its own currency or foreign currency that a nation purchases or sells.
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Official Reserves
* government holdings of foreign currencies,or buying or selling other international reserves such as gold.
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Capital Account
* is the part of the balance of payments account in which all-short term flows of payments are listed
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Current account has a 2 balances.
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1. The Balance of Merchandise Trade
* is a dissimilarity between the value of goods exported and the value of goods imported
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2. Balance of Trade
is the difference between
the value of goods andservice exported andimported becomes a
keystatistic for economics.
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Exchange Rate
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Basic Forces DeterminingExchange Rates
* means they're trying to
rate analysis is brokendown to fundamentalanalysis, short run
analysis
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*Changes in Interest rates*Changes in
Country's Prices*Changes in
Country's Income
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*Exchange Rate Determination is Complicated
*Fixed Exchanged Rate System
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Alternative exchange
rate systems
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1.Partially Flexible Exchange Rates
2.Flexible Exchange Rates
3.Fixed exchange rates
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Exchange Rate Through Trade Policy
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3 Kinds of Trade Policies have as a
consequence giving in order to meet
balance of payments
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1. They cause other countries to retaliate or get back/revenge
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2. They put down Global Welfare
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3. They stop or hinder competition
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The GENERAL AGREEMENT on Tariffs and Trade(GATT), they curtail trade barriers, this was set up immediately following
World War 2, World Trade Organization (WTO) getting
countries to concur not to take advantage of new tariffs or other
trade restrictions.
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Quotas
are quantity limits placed on
imports/prescribe number
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Voluntary Restraint Agreements
agreements in which countries
voluntarily restrict their exports
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Nationalistic Appeals
request can help to restrict international
trade
example:( buy filipino product)
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Regulatory Trade Restrictions
government imposed procedural rules that
limit imports embarges a restriction
on the imports or exports of good
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FREE TRADE
a policy of enabling
unrestricted trade among countries
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Balance Trade
the commercial balance or net
exports
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TRADE SURPLUS
a positive balance, consists of exporting more than is imported
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TRADE DEFICIT
negative balance, or normally a
trade gap
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Regulatory Trade Restrictions
- is an artificial restriction on the
trade of goods and/or services between two
countries
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Strategic Trade Policies
-most countries used two types of
strategic trade policies
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Tariff
a tax on imports or exports
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