Here is the synopsis of our sample research paper on The Foreign Exchange Rate Model. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
A 2 page paper describing the exchange rate model. The exchange rate model is that which equates the currency of one nation to that of another. Movement in that ratio is the determinant of whether the currency of any given country is weakening or strengthening, which most basically depends on the relative perceived strength of the economies of the two countries in comparison to each other while also considering the state of the global economy. When the dollar is said to be strengthening against the yen, then more yen are required to equate to one dollar, raising US import prices in Japan and decreasing Japanese import prices in the US. Bibliography lists 6 sources.
Page Count:
2 pages (~225 words per page)
File: JR7_Ratemode.doc
Buy This Term Paper »
Unformatted sample text from the term paper:
of a single product in all locations in which it is sold. Interest Rate Parity Theory is more involved but also involves international trade and exchange of currency, though
in a more futurist view than price parity. The Federal Reserve Bank of St. Louis Review uses an apt example for explaining the concept of price parity in reporting information
originating from Britains The Economist. (Pakko and Pollard, 1996). Their common point of example is that of the Big Mac(tm) as it is sold in countries around the
world. The price at which the product can be sold is dependent on local supplies of raw materials and either distribution uniformity between all markets in which the product
is sold or adjustments for differences in those available distribution resources and suppliers. Even after taking into account all applicable conditions, such as available raw materials, expenses, exchange rates, etc.,
"Empirical analysis regarding the application of Purchasing Power Parity theory indicates that the prices of identical commercial goods sold in different countries do not necessarily become equal even after adjusting
said prices using prevailing exchange rates. Using McDonalds Big Mac hamburger as an example, differences in prices may be affected by factors such as the effect of non-traded goods, differences
in current accounts, imperfect competition and trade barriers" (Pakko and Pollard, 1996; p. 78). Interest Rate Parity also applies to the sale and purchase of goods and services in the
international marketplace, but carries more implications for the future, rather than concentrating on conditions as they are in current evaluation. Applying to the changes realized in currency value
movement between the time an agreement of purchase is made and when actual payment is due, the real price paid often depends on a combination of current interest rates within
...