IB 200 - 05:24 SampleQuestions , oftrade,...

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05:24 Sample Questions Vernon’s prod life cycle theory, which is concerned with         in determining the pattern  of trade, is probs not as applicable to day because of The role of innovation The first mover advantage Factor endowments; Leon para The level of nation’s rate deficit The costs of domestic subsidies are ultimately born my taxpayers Know your countries! Finish other slides… Price and Exchange Rates Slide 1 Comes down to supply and demand Comparing prices in market place to prices in other marketplace gives you  what you should trade at Ex: exchange rate is this, price should be this and vv.  o Maybe price will be higher because people don’t wear jackets in that  area. Etc Purchasing Power  Basket of goods o Housing cost, fuel, milk eggs bread Big Mac Index Example of theory
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Compare, proves somewhat reliable at predicting what exchange rates will be leaning  towards Mcdons uses localized for it product Different products around the world Long term, RMB will be under valued based on this example Tries to determine value of exchange rates Facets of monetary systems What currency is used, is it convertible? Can it be traded Currency exchange controls Control by creating and invariable value. People aren’t going to buy foreign product if 
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This note was uploaded on 12/18/2011 for the course BUS 200 taught by Professor Tuli during the Fall '10 term at University of Wisconsin.

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IB 200 - 05:24 SampleQuestions , oftrade,...

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