Exchange Rates and International Trade INTRODUCTIONObjectiveThe general objectives of this study are to describe recent trade problems and examinewhy these problems are related to, and affected by exchange rates. The study firstexamines the exchange rate and how it is determined. The study will explore, in detail,the agencies that determine these rates. This study will also present the pros and cons ofdifferent prices of goods and services in different countries. Specifically, this paper:(1) defines recent trade problems and how they are affected by the exchange rate;(2) describes the steps taken within the agencies that determine the exchange rates;(3) examines the impact of these rates, both good and bad;(4) analyzes the costs of similar goods in the U.S. and in foreign markets;(5) discusses the pros and cons of the exchange rate and how it affects trade;(6) examines various exchange rate systems: floating, fixed, and dirty floating.Limitations of the StudyThe topics of exchange rate and trade both have a variety of factors that cause changes. As with any study that attempts to explore current developments in the economy, it ishard to keep information current. It is also virtually impossible to report on the status ofevery single government that is involved in the exchange market. One of the limitationsof this study is to report on up-to-date values of currency while choosing a sample ofgovernments that accurately represent the world economy. Therefore, the solution was touse stastical figures from magazine articles and books that were written within theprevious year. Also, the countries that were chosen to be studied are considered to playa significant role in the exchange rate market.Plan of the PaperThis study first examines the relationship between the exchange rate and trade. Thisexamination includes a definition of the exchange rate, an explanation of how the rate isdetermined, and a detailed description of t...
