One standard that corporations use to evaluate their performance against their competitors is the set of rankings developed by Fortune magazine. These include the Fortune 500, the 100 Best Companies to Work For, and other lists. The public also uses these rankings to decide to what companies they should give their business.
Respond to the following in a minimum of 175 words:
- Discuss who gains and who loses when an economy opens for trade.
- Explain what determines exchange rates in the short and long run.
Reply to at least 2 of your classmates. Be constructive and professional in your responses.
*** CLASSMATE RESPONSES ATTACHED***
175 words to Discussion Post
125 Words Per Classmate Response (250 in total)
When an economy opens up for trade, businesses are able to buy and sell in the world market. This would be advantageous to exporters, which will also create more jobs. Uncompetitive domestic firms would lose business because they produce at a higher cost than the world market competitor. The consumers would choose to buy from the importers rather than domestically. This could lead to job losses from the decrease in demand (Pettinger, 2018). Corporations that are on the Fortune 500 and the 100 Best Companies to Work For are identified as competitive and are likely the ones that will remains successful when an economy is open for trade. The public will use these rankings to decide which companies they should support.
In the short run exchange rates are determined by foreign consumers, speculations on future demands of currency, and central banks’ investments in foreign currencies. In the long run, the exchange should reflect that a “basket of goods costs the same in two currencies. The exchange rate constantly changes and can increase during tourist seasons when the foreign demand for domestic goods are higher (Moffatt, 2019).
Moffatt, M. (2019). What Determines an Exchange Rate?. Retrieved from https://www.thoughtco.com/what-determines-an-exchange-rate-1147883
Pettinger, T. (2018). Who are the winners and losers from free trade?. Retrieved from https://www.economicshelp.org/blog/141607/economics/who-are-the-winners-and-losers-from-free-trade/
Free trade is when the economy can export and import goods without tariff barriers. During this time it leads to lower prices and increased exports and imports. When concerning freed trade, there be some that will gain from it and as well as some lose from it. The individuals that would gain from a free trade would be the people buy imported goods and the people who produce exported goods. The individuals that would lose from a free trade would be the people who buy exported goods and the people who produce imported goods. These individuals will also lose their jobs because the industry they are in is uncompetitive.
The supply and demand of each currency determines the exchange rates in both the short and long run. The demand for things such as goods, services, and investment opportunities in that currency will predicate the short run exchange rate. When concerning in the long run, things like inflation, consumer trends, the productivity, and trade policies will affect the exchange rate.