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12 - p 317-344 Barter trade w/out money o Occurs when...

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p. 317-344 Barter- trade w/out money o Occurs when monetary systems don’t operate well o Ex: transactions expressed in terms of cans of beer. Exchange rate - each state’s currency can be exchanged for a different state’s currency according to this o They effect almost every int’l economic transaction. o Ex: how many Canadian dollars are equivalent to one US dollar o G7 states- US dollars, euros, yen, British pounds, and Canadian dollars Convertible currencies o Some states don’t have these- where the holder of money has no guarantee of being able to trade it for another currency. Cut off from capitalist economy, EX: Soviet Union Sometimes unconvertible money can be sold in black markets, by dealing directly with the govt issuing the currency, etc, buy the price may be extremely low. Hyperinflation o Extremely high, uncontrolled inflation- more than 50 % per month, or 13,000 % per year o Money loses its value every week – hard to conduct business domestically and internationally Hard currency
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