Determinants Of Exchange Rate

Submitted By i2sweet

Words: 378

Pages: 2

Open Document

The United States' current exchange rate system is also known as a managed float exchange rate system. In other words, the demand and supply sector of the US economy is a major determinant of the value of our currency. Overtime, the US dollar has fluctuated widely in value which is clearly depicted on page 607 of chapter 18. It is evident that although the US dollar gained value against the Canadian currency from 1973-2008, it lost value in comparison with the Japanese yen between the same years. Determinants of the exchange rate values in the short run may include changes in interest rates as well as changes in future expectations of currency values. When considering exchange rates, I only thought about it upon traveling to other countries; however, I never really linked it to routine aspects of our daily lives. For example, some people find it hard to believe that our gas prices are still increasing despite the fact that the value of the dollar is declining. When the US economy is weak, interest rates will fall and investors will choose to place their money with other currencies because they know they will incur a higher return. Thus, as the dollar falls, there is less demand of it. Oil is priced by dollars in the world market and as the value of the dollar declines, the value of foreign currency gets stronger. A news article introduced an example that I felt was quite clear: Assume that a barrel of oil costs $100 and $100 is equal to 70 euros. If the US dollar decreases

Energy security essay Jan 2010

Assess the relative importance of named players in the global supply of energy. Global energy security involves a number of players with varying roles to play; key players include OPEC, National Governments and consumers and TNC’s. All of these players are stakeholders within the energy market and have a varying degree of responsibility within the energy game Governments are responsible for energy resource supply, for example the UK government nationalised the coal industry, meaning that the government…

Words 992 - Pages 4

What Is The Economic Consumption Trends Explain The Relationship Between Supply And Demand

relationship between supply and demand. These trends are studied to define spending habits and patterns of the consumer. All goods and/or services with goods being defined as “all things that are moveable at the time of identification to a contract for sale” (U.C.C. Article 2-Sales ND) used by the consumer are dictated by supply and demand. This following information will examine the consumption patterns of natural gas as it relates to the supply and demand of said good. Natural gas consumption for…

Words 683 - Pages 3

Essay about Project Part 1 Gasoline

lower your gas prices will be. That is because the transportation of gas to stations throughout the U.S. is expensive, and that cost is passed on to consumers like you in the form of higher prices. “(Rosetta, 2012) the article refers to how each location can have an effect in how the price will be charged in each location. If you live close enough to the gulf coast you will be paying less for gas than those who live farther away this is due to the fact that the transportation to get the gas to the different…

Words 873 - Pages 4

Project 1 Essay

determined by supply and demand with a great deal of influence coming from the Oil Producing and Exporting Countries (OPEC) as they decide on how much oil to produce and sell to other countries. OPEC consists of thirteen countries which make up 40 percent of the world’s oil production and they hold a major part of the world’s oil reserve. “When OPEC wants to raise the price of crude oil, they simply reduce production. This causes the prices of gasoline to jump because of the short supply, but also…

Words 1270 - Pages 6

Price Elasticity And Supply And Demand

Material Appendix B Price Elasticity and Supply & Demand Fill in the matrix below and describe how changes in price or quantity of the goods and services affect either supply or demand and the equilibrium price. Use the graphs from your book and the Tomlinson video tutorials as a tool to help you answer questions about the changes in price and quantity |Event |Market affected by event |Shift in supply, demand, or both. |Change in equilibrium…

Words 623 - Pages 3

Essay on Marginal Cost and Gas

it, and the potential risks to the business. Gas is an essential commodity in the market that has created controversial issues each time there is a price change (www.ehow.com). This paper will present a business proposal proposing gas as its commodity. It will review on the market structure, the elasticity of demand and supply for gas, present the fixed and variable costs, marginal cost and marginal revenue, and suggest non-pricing strategies for gas as a sample commodity. Market Structure The…

Words 933 - Pages 4

Energy Price Based Promotion and Price Tactics Essay

believe that energy companies need to give greater recognition to their consumers. Introduction The price based promotion offered by British Gas (herein BG) during winter 2009/10 brought significant results in term of profits and market share. Hereafter are analysed the reasons for BG success as well as discussed the possible price strategies for gas retail sales. This analysis is based on the following points: * Analysis of consumers behaviour vs product/offer/pricing strategy…

Words 1559 - Pages 7

Inelasticity Of Gasoline Research Paper

convenience store sales can attract a number of entrepreneurs to invest in gas stations. While American…

Words 1846 - Pages 8

Essay on Mmg 550

increase. Other reasons can also include the fact the price may rise over a holiday weekend, also supply and demand can set the market price of gas. Living in St. Louis a person can see gas prices change once a day at least sometimes two. Many people complain to gas station workers about this and the reply is always it is out of their control. This is true they don’t set the price for the fuel. In the city gas seems always to be cheaper on Tuesdays, Wednesdays, and Thursdays. Most people think this is…

Words 983 - Pages 4

Economic Manipulation

in a certain supply in order to increase sale profits. A November 9, 2011 article on community.cengage.com, states that a false product shortage is a form of artificial scarcity induced by a supplier, often with the intent to elevate consumer demand above levels that may otherwise be achieved in the absence of such scarcity. These two come into relation when our government uses “shortages” as a way to manipulate the economy. Let’s use oil for example. I’m sure the lack of oil or gas is something…

Words 1059 - Pages 5