Problem 7
In July 2005 , the Chinese RMB became fixed to a "market-basket" of currencies, including the U.S. dollar and the Japanese yen, removing a decade- long peg to the U.S. dollar alone. The new formula slightly raised the value of the RMB. If China's trade surpluses continue, what will happen to the value of the RMB?
Problem 7
Making Inferences and Drawing Conclusions Some regional trade associations are viewed as an attempt by less developed countries to protect themselves and their regions from globalization's aggressive momentum. Explain how regional groups might have that effect.
Problem 7
You have just learned that highquality electric guitars made in South Korea will soon be exported to the United States. Should you buy a new guitar now or wait until after the imports begin arriving? Explain your answer.
Problem 8
Why does the law of comparative advantage explain that all people and nations can trade?
Problem 8
Solving Economic Problems If you were the CEO of a manufacturing company facing stiff foreign competition, what are some ways you could adjust your business to stay competitive? What are the advantages and disadvantages of these changes?
Problem 8
While you are in France on a business trip, you find out that the euro has gained strength against the U.S. dollar. Will your hotel room and food now be more or less expensive? Why? What about the goods you're trying to sell on your trip; will they be more or less expensive to your customers in France? Why?
Problem 8
Analyzing Cause and Effect Many multinationals grew out of exporting businesses. How might the exporting business prepare a company to become a multinational?
Problem 9
Making Inferences and Drawing Conclusions Japan has the world's largest foreign currency reserves, followed by China. State two conclusions you can draw about the economies of these two nations based on their foreign currency reserves.
Problem 9
How does international trade help create jobs? How does it shift jobs?
Problem 9
Applying Economic Concepts Give three examples of U.S. citizens earning an income by selling products domestically that were made in other countries. Give three examples of U.S. citizens earning an income by selling products or services that are ultimately purchased by people in other countries.
