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International Economics - 10.23.07

International Economics - 10.23.07 - (the number in front...

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-Tariff is essentially the same as a quota. The difference is who gets the extra revenue? -Quota helps foreign exporters Chapter 12(2) Foreign Exchange – in order to purchase products/services from other countries, individuals have to buy currency of the country with which they are trading. Exchange Rate – the price of one currency in terms of another. “Dollar goes up” \ “Dollar goes down” / these are vague $1 buys 2Euros ½ $/E or 2 E/$
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Unformatted text preview: (the number in front indicates how many of the numerator you need in order to get the bottom one.) 2 Yen/$ changes to 3 Yen/$ this shows that Yen weakened, or $ strengthened EX: Cost of British rain coat is E200 cost in $ ER($/E) 1 (1 $/E)(E200) = $200 2 (2 $/E)(E200) = $400 3 = $600 4 = $800 Cost of Ford Mustang ($10,000) ER (E/$) 1 (1 E/$)($10,000) = E10,000 2 (1/2 E/$)($10,000) = E5,000 3 (1/3 E/$)($10,000) = E3,333...
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