1. International Economics and Trade
Introduction to Economics
Johnstown High School
Mr. Cox

2. The Issue of Currency Apples to Oranges Exchange Rate
Different currencies mean different things
Dollar =/= Euro =/= Yen =/= Pound
Gold standard? Nope! Only confidence of the American people!
Exchange Rate
Usually converted to American Dollars
Trends
American dollar has become increasingly inflated and more valuable

3. Trends Cont’d
Despite Inflation, US Dollar is still performing well globally
So well, it is the top valued currency in the world

4. Actually, very well
Most nations actually keep their reserves (national piggy bank) in American Dollars

5. How does a strong currency impact a nation?
Strong Currency – close in value to the USD (Euro, Yuan)
Impacts
More purchasing power for consumers domestically
Decrease in domestic sales as foreign products become cheaper, therefore, imports would increase
Strong corporations, promoting domestic investment
How does a weak currency impact a nation?
Weak Currency – farther away in value to the USD (Yen)
Exports would increase because they would be demanded internationally
Therefore, jobs and corporate growth will increase
Weak domestic stock prices, promoting international investment

6. Counterfeiting The illegal replication of a currency Problems
Illegal purchasing
Fraudulent earnings
INFLATION
Many US laws have been passed to stop counterfeiting
Stops Fed from regulating money supply

7. The Euro European Union Pros Cons
A group of European countries that participates in the world economy as one economic unit and operates under one official currency
Goal is to create a barrier-free trade zone and to enhance economic wealth by creating more efficiency within its marketplace.
Pros
No worries about exchange rate
Promotes trade among member nations
Cons
Countries cannot implement specific monetary policies
Countries are tied to performance of others, good or bad

8. Movements of the exchange rate
between the U.S. dollar and the euro