StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

International Trade Simulation - Assignment Example

Comments (0) Cite this document
Summary
International Trade Simulation One advantage and one limitation of international trade While engaging in trade with other countries, Rodamia may have to face the issues regarding the valuation of its currency against the valuation of the currency against other countries…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.2% of users find it useful
International Trade Simulation
Read TextPreview

Extract of sample "International Trade Simulation"

International Trade Simulation One advantage and one limitation of international trade While engaging in trade with other countries, Rodamia may have to face the issues regarding the valuation of its currency against the valuation of the currency against other countries. The currency of Rodamia must be either strong or at par with the valuation of other currencies otherwise the consumers of the country will not be able to purchase goods in the global economy. A strong currency boosts the confidence of the consumers and acts as an encouragement to the investors. Investments in the business growth will act as the catalyst to spur growth and will encourage expenditures among producers as well as consumers. Opening up of trade will provide wider product choices in front of the consumers causing demand for goods to take the steep rising curve. The producers and the consumers will accrue the benefits. The country can gain comparative advantage by specializing in one product and mitigate the losses. The competitive exchange rates regime will ensure the consumers of the country to afford the imported goods and sustained flow of investment will pave the path for future success. Two or more countries involve in trade as there is lack of resources n one country. There are many advantages as well as limits that are concerning trade. Benefits are accrued to each country but there are additional limits that need to be managed by international trade. One of the advantages of international trade is that it opens up choices for each country. A country can impose barriers to trade or can engage itself in free trade. Again a limitation that can be accounted for international trade is the time a country decides to lay down tariff or quota on another country. It may be the case that the decision is not good enough and the country that took the decision has to accept it without any choice. The generation of imports will influence the economy under consideration. It may influence the tax base. No economy is engage in trade causing deficits in the budget. The country can take the initiative to impose tariff barriers with the aim to protect the domestic producers. Absolute and comparative advantage Absolute and comparative advantage is two important terms in international trade. The concept of absolute advantage states the country of Rodamia can produce more goods using the same resources as that of another country. The country will gain by specializing in that good that has comparative advantage from the other countries (Maneschi, 1998). The country must produce and export that good where the opportunity cost is lower compared to the other countries. Such strategies will allow Rodamia and the trading partner to generate best economic welfare. The effects from trade can be determined by comparing the domestic price without trade with the prices prevailing in the global market. If the domestic price is low the country has the comparative advantage to become the exporter whereas high domestic price implies the opportunity for the country to become importer (Peng, 2010). The concept of comparative advantage has its role in the total production costs of the good or service. Influences affecting foreign exchange rates The exchange rate can affect the international trade. The exchange rate can be defined as the country’s price with respect to that of another country. The exchange rate is determined by the supply and demand forces within an economy. The conditions in the international market also determine the regime of exchange rates. The interest rates can also affect the exchange rate through a chain reaction. The chain starts from the rise in the rates of interest which will lead to higher return on the bonds as well as for other securities of the government. The chain also contributes in attracting financial capital from other nations. If the exchange rate of one country is lower than that of the other country then the consumers of that country will suffer from the incapability of purchasing the imported good. As a result the demand conditions suffer. Again if the exchange rate is higher compared to other nations investments cannot be expected to flow in and therefore the economy as a whole can be under threat. Therefore it is necessary for Rodamia to keep the exchange rate at such a level that matches the exchange rate prevailing in other countries. References Maneschi, A. (1998). Comparative Advantage in International Trade: A Historical Perspective. UK. Edward Elgar Publishing. Peng, M. (2010). Global Business. UK. Cengage Learning. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“International Trade Simulation Assignment Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1464150-international-trade-simulation
(International Trade Simulation Assignment Example | Topics and Well Written Essays - 750 Words)
https://studentshare.org/macro-microeconomics/1464150-international-trade-simulation.
“International Trade Simulation Assignment Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1464150-international-trade-simulation.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF International Trade Simulation

The Role Played by Cultural Difference in International Politics

The discourse of multiculturalism is inconsistent. To its advantages belongs preservation of cultural pluralism, recognition, and protection of the diverse minority, refusal from xenophobia, chauvinism, and racial prejudices. Lacks are shown in ethnisation of social relations, the institutionalization of cultural distinctions, ignoring the liberal principle of priority of the rights of an individual.

The culture of any nation, defining its spiritual uniqueness, expressing its creative power and abilities, simultaneously is a property of all mankind. “According to official multiculturalism, no individual is forced to retain his or her culture, but all cultures are granted a universal right to celebrate and even to...
9 Pages(2250 words)Essay

International Trade Theory

 Further to this, it is also believed that international trade can bring substantial economic welfare to the countries however still most of the countries do not view it as a favorable thing. Despite having a very promising and bright outlook, international trade has been largely viewed with suspension and it is because of this that governments impose barriers to restrict international trade. There can be many reasons behind this act of imposing restrictions or blocking international trade however there are also benefits on the other side too.

International trade has driven the attention of many of the brilliant minds in economics therefore the origins of the economic theory on international trade owe much to the c...
6 Pages(1500 words)Case Study

The Trade Union Movement in the UK

Before the ERA 1999, union membership and recognition in the UK were characterized by voluntarism, in which employers and employees could bargain over the terms and conditions of employment without any legal interference. With the statutory system ushered in by the new law, voluntary recognition of unions is no longer allowed and it becomes unlawful for British employers to deny recognition to unions under any circumstances. That conveys the impression that ERA created a radical change in British industrial relations. This paper takes the contrary view, however, and proposes that while the new industrial relations law looks revolutionary in principle, there are no fundamental changes in actuality for the change to qualify as &ldqu...
8 Pages(2000 words)Case Study

Globalization and International Business: Starbucks Corporation

The Small Business Encyclopedia defines globalization as the process by which the economies of countries around the world become increasingly integrated over time. This integration occurs as technological advances expedite the trade of goods and services, the flow of capital, and the migration of people across international borders (globalization, Answers.com).
The shreds of evidence of globalization are all around us. For example, Hill (2005) cites an example of an American driving a car designed and produced in Germany that was assembled in Mexico from components made in Japan fabricated by Korean steel and Malaysian rubber. The car is filled with gasoline from oil pumped from off the coast of Africa, at a service station o...
12 Pages(3000 words)Case Study

Potential Benefits of International Trade

... Content Outline I. Introduction (a) Definition (b) Background II. The Reason Why Countries Take Part in International Trade (a) Major Commodities in Today’s International Trade and Economic Gains Arising From it (b) Reasons Compelling Countries to Place Restrictions in International Trade III. Conclusion I. Introduction (a) Definition The expression international trade refers to an exchange of commodities across boundaries of nations. Two major terms are used to describe international trade (that’s imports and exports). Imports are services and goods bought from other countries while exports are the services and goods sold to nations or individuals of foreign countries. (b) Background It’s estimated that the international business...
6 Pages(1500 words)Coursework

Macroeconomics and Trade Policys

Keynes argued that prices and wages do not determine the level of employment, as many classical economists suggested, but instead the level of aggregate demand for goods and services (Case & Fair 683). Keynes realized as well during the Great Depression that the government could intervene in the economy to attain specific employment and output goals by either increasing or decreasing taxes and government spending.

For example, raising taxes will decrease the disposable income of households and thus effectively decreasing consumption. When the government decreases consumption, the household demand for goods and services decreases thus it would only seem reasonable that the amount of output that the economy would also...
7 Pages(1750 words)Article

International Security Studies: Examination

Globalization affects international security in the sense that problems involving terrorism, the environment, religious extremism, weapons of mass destruction, and the economic crises have become more universal and widespread in character (Ivanov “Article”). As a result, these issues pose a greater threat to national and international stability and safety. More lives are now affected by threats to international security; these threats did not seem too ominous before the entry of globalization. Consequently, some extremists justify the use of mass weapons of destruction in order to guarantee their security. And as globalization continues to expand and to grow bigger as a phenomenon, threats to international security are...
7 Pages(1750 words)Assignment

International Law: Child Soldiers

Using children to fight wars is not only morally abhorrent but very bad very the physical and mental health of the children in question. That is in part why a series of international laws and treaties have come into effect to try to deal with this scourge. But the issue is more complicated than that. While child soldiers are victims of war crimes, they too can also perpetrate serious breaches of the law of armed conflict. Under normal circumstances, individuals who commit such acts, be they combatants or not,2 would be vulnerable to prosecution. However, because children in such situations are victims as well as perpetrators and because of the special protections afforded to children under international law, many have questioned w...
8 Pages(2000 words)Case Study

International Affairs v. Liberalism

As a matter of fact, Hoffman’s statement that “international affairs is the nemesis of liberalism” has a grain of truth in it and this is especially so after the 9/11 incident.
There are two schools of thought or perspectives that are used to view international affairs: liberalism and realism. The study of these two perspectives is significant to the idea posed by Stanley Hoffman because they determine the reasons why international affairs, according to him, does not only see eye-to-eye with liberalism but seems to stand on the opposing side of it.
Liberalism can be defined as having four elements: citizens; the legislature; property rights, and; a market-driven economy (Dunne 186). Realism, on the othe...
6 Pages(1500 words)Assignment

International Business: World Economic Forum and Davos 2010

... sense power consumption and power quality. A modest sheet of paper, 50,000 thinner than human hair, when stacked, nets a material 500 times stronger than steel and is changing the way airplanes, automobiles and electronics are made (Alpern, 2009). International Technological collaborations are taking place in the form of strategic alliances, joint ventures and intimate supplier-producer relationships. Such collaborations include activities such as joint development agreements, technology sharing and R&D contracts amongst others (Rycroft, 2002). ICT has pervaded every aspect of business and today the value chain depends on the use of technology to link the customers and suppliers. In the current dynamic and global markets, technology...
7 Pages(1750 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Assignment on topic International Trade Simulation for FREE!

Contact Us