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b.What is the ‘Monetary Equation’. Why is it important to the financial manager? c.What are the implications of this for the ‘foreign exchange market’?What is inflation going to be?6.Trade Policy and Offshoring Strategy:a.Why do nations trade with one another? Explain in your own words.(Ricardo’s Comparative advantage Chapter 1 Appendix: Economics and Efficiency)d.What is Dynamic Comparative Advantage? What are the implications of this for the current debate on “Outsourcing” and “Off-shoring?” [Vernon’s Theory]c. What strategies should corporations adopt to minimize the impact of off-shoring on its employees?7.Theoretical Relationship 2 : Relationship between Inflation and Interest Rates; Domestic Fisher Effect
A.What is the ‘Domestic Fisher Effect’? B.What is the relationship between Inflation and interest rates ? C.Why is it important for the Global Financial manager?8.Theoretical Relationship # 3: Relationship between Inflation and Exchange Rates; Purchasing Power Parity A.Explain the concept of ‘purchasing power parity’ (PPP) in your own words. B.What are the requisite conditions for PPP to exist? C.What is the relationship between PPP and exchange rates ?