Suppose that you are a U.S. producer of a commodity good
competing with foreign producers. Your inputs of production are priced in dollars
and you sell your output in dollars. If the U.S. currency depreciates against
the currencies of our trading partners,
position is likely improved.
position is likely worsened.
your competitive position
Undoubtedly, we are now living in a world where all the major
economic functionsâ€”consumption, production, and investment
are still regional
Most governments at least try to make it difficult for people to
cross their borders illegally. This barrier to the free movement of labor is
an example of
Although the world economy is much more integrated today than
was the case 10 or 20 years ago, a variety of barriers still hamper free
movements of people, goods, services, and capital across national boundaries.
These barriers include
all of the above
The Japanese automobile company Honda decided to establish
production facilities in Ohio, mainly to
both a and b
When individual investors become aware of overseas investment opportunities
and are willing to diversify their portfolios internationally,
they trade one
market imperfection, information asymmetry, for another, exchange rate
they benefit from
an expanded opportunity set.
they should not bother
to read or to understand the prospectus, since its probably written in a
they should invest
only in dollars or euros.