While the video provides a reason why a country may want to manipulate the value of its currency, doing so is usually a violation of the free trade rules for fully floating currencies. The Chinese Yuan is a managed float currency, while the US Dollar is fully floating. You will examine these terms this week.
Note: The video has Closed Captioning. To activate it, start the video, mouse over the bottom of the video and click on the CC icon, then select from the menu.
This week we are going to look more globally and examine exchange rates.
An exchange rate is simply the price of one currency in terms of another currency. In other words, how many US Dollars does it take to buy one British Pound? Remember that an exchange rate ALWAYS involves two currencies which means two countries. Review in detail, the three Exchange Rate presentations before you start your work on this week’s discussion assignment.
While they are conceptually simple, many economic factors go into the determination of exchange rates. And exchange rates influence many of the prices you pay in the store, they influence the number of jobs in the export sector of the economy, and they even impact the price of a cup of coffee. In a global economy most products contain materials from other countries and that includes food. If you had orange juice today, it may well have come from Brazil. Your computer and your cell phone contain parts from America or Japan or Taiwan or Thailand or one of the European countries or from all these places. Thus, exchange rates directly impact the prices you pay for goods. This is your chance to learn more about how that works.
Now we are ready to examine how exchange rates are determined.
Assignment Summary:
Watch the above video
Review the following power point presentations:
Exchange Rates Pt1.pptx Exchange Rates Pt1.pptx – Alternative Formats
Exchange Rates Pt2.pptx Exchange Rates Pt2.pptx – Alternative Formats
Exchange Rates Pt3.pptx Exchange Rates Pt3.pptx – Alternative Formats
Go to the X-Rates Web site X-rates ( and find the current:
exchange rate for the US Dollar (USD) and any other country’s currency that you wish to study – you can select the same country that you are using for your research project, (unless it is the Peoples’ Republic of China). Do NOT select the Chinese Yuan as your other currency since it is not a freely floating currency.
Then from the icons next to the currency selection boxes, select Graphs and then select 1 year.
Based on the 12 months of data, which currency is appreciating (gaining value) and which is depreciating (losing value)? Remember it can do both in a year.
Now go to the CIA Fact Book and find out what goods and products the country you chose exports.
What do the trends in the exchange rates you examined tell you about the prices you can expect to pay for goods imported in the selected country?
On the discussion board also share your findings about the following:
What do you think this means for American imports from your country?
What do you think it means for American exports to your country?
MAKE SURE THAT YOU ADD SOMETHING NEW to the discussion.
Read the introduction I posted in the discussion, post on three different days for a minimum of three posts. Failure to meet these minimum posting requirements results in point loss.
Include a word count on each post. All of your posts should sum to a minimum of 500 words.
Each post submitted should be between 150 and 250 words. Keep them short, specific, and clear.
Use paragraphs as appropriate.
Very lengthy posts do not provide an incentive to be read.
Every post must be detailed, and relevant to the week’s topic. Add something new to the discussion. Don’t wait to last minute. Your first post must be on or before it to get full credit.
Respond to your classmates’ posts, whenever possible, rather that start a new Discussion thread that says essentially what has been said already. Too often, students start new threads in the Discussion, rather than expand on what has been posted. It is imperative that the conversation be interactive, for us to get the full benefit of each other’s insights.
Answer any additional question posted by your professor.
Remember to document all use of sources by using citations and references. These should be in
Apa format. Apa format. – Alternative Formats
Please review Plagiarism PowerPoints ( PLAGIARISM.ppt PLAGIARISM.ppt – Alternative Formats ) and be sure to provide references , including URLs where appropriate, to all works that you cite.
Discussion grading criteria: Discussion Rubric ECO2013.docx Discussion Rubric ECO2013.docx – Alternative Formats
Need citations
