Foreign Exchange Rates

docx

School

University of Texas, Dallas *

*We aren’t endorsed by this school

Course

MANAGERIAL

Subject

Economics

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by HighnessPowerMandrill29

Foreign Exchange Rates 1 Activity 4 – Foreign Exchange Market Student’s Name: Shriya Agarwal Institutional Affiliation: University of Cumberlands Course: 2023 Summer - Managerial Economics (BADM-535-B03) - Second Bi-term Instructor: Craig Hovey Due Date – 7/30/2023

Foreign Exchange Rates 1. In 2014, the euro was trading at $1.35 on the foreign exchange market. By 2015, the rate had fallen to $1.10, due to falling European interest rates. Explain the fall in the price of a euro using supply and demand curves, and in words. Solution 1- Initial Value of Euro = $1.35 Dropped Value = $1.10 In this instance, the value of the Euro has decreased. Each euro was worth 1.35 dollars in 2014, while 1/1.10 dollars were exchanged for each euro in 2015. It will cause a shift in the dollar demand curve to the right, resulting in a higher price per dollar and a greater level of demand. The demand for dollars will rise as the European interest rate declines. . After an increase in demand, the demand curve moved, and the new equilibrium rate is now $1.10 Dollar per Euro. In this case, the old equilibrium is at E, where the exchange rate is 1.35 Dollar for every Euro.

Foreign Exchange Rates 2. Using shifts in supply and demand curves, describe how a change in the exchange rate affected your industry. Label the axes, and state the geographic, product, and time dimensions of the demand and supply curves you are drawing. Explain what happened to industry price and quantity by making specific references to the demand and supply curves. How can you profit from future shifts in the exchange rate? How do you predict future changes in the exchange rate Ans: I worked as an intern in an athleisure clothing company that sells clothes across the world. From 2014 to Oct 2022, the Euro exchange rate fell from $1.39 to $0.97. This caused the demand curve to shift towards the right due to a decline in the exchange rate. The demand for clothes has shifted from D to D1. The goods became more affordable in comparison to those produced in other countries. As a result, this economy experienced an increase in demand for products in the clothing industry. Both the price and the amount rose in the market at this new equilibrium point. In this situation, the demand will continue to rise while the supply will remain the same in this situation, which will raise the price level. Demand for goods and services made in this country will become more expensive as prices rise. Therefore, there will be less of a demand for goods and services in the future, which will hurt profits. In conclusion, Consumer tastes and Exchange Rates affect the demand and supply of products (Amaldoss & He, 2019)

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Foreign Exchange Rates ( Clothing industry) The results from the analysis can contribute to effective decision-making, which can help to have adequate production of athleisure clothing. The management of the company could also use the analysis to adjust the prices of the clothes to reflect the consumer taste changes and the rise in production in the industry. Proper pricing and marketing can help to achieve the overall growth and financial performance of the company. The pricing analysis based on the exchange rates may enable the company to position itself best for success in the changing clothing industry.

Foreign Exchange Rates Reference Amaldoss, W., & He, C. (2019). The charm of behavior-based pricing: When consumers’ taste is diverse, and the consideration set is limited. Journal of Marketing Research, 56 (5), 767– 790. https://doi.org/10.1177/0022243719834945

Related Documents

JawadAhmed_Assignment2.docx

ST. D Examples.docx

Consumer Tastes.docx

Automotive Industry.docx

Markets, Equilibrium and Profits Discussion.docx

Week 7 - Research Project.docx

Opportunity Costs Discussion- Week 1.docx

Investments and Pricing Problems.docx

1-3 Activity - Roles and Responsibilities-Stakeholder Register Go Team Sports.xlsx

Kelly - ECO 2307 Homework 4 - Fall 2022.docx

Saifeldeen Allam.docx

Week 6 Discussion 2.docx

Recommended textbooks for you

Managerial Economics: A Problem Solving Approach

Economics

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Cengage Learning

Managerial Economics: Applications, Strategies an...

Economics

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:Cengage Learning

Economics Today and Tomorrow, Student Edition

Economics

ISBN:9780078747663

Author:McGraw-Hill

Publisher:Glencoe/McGraw-Hill School Pub Co

Microeconomics A Contemporary Intro

Economics

ISBN:9781285635101

Author:MCEACHERN

Publisher:Cengage

Exploring Economics

Economics

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:SAGE Publications, Inc

Survey Of Economics

Economics

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Cengage,

SEE MORE TEXTBOOKS

Recommended textbooks for you

Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Microeconomics A Contemporary Intro
Economics
ISBN:9781285635101
Author:MCEACHERN
Publisher:Cengage
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Survey Of Economics
Economics
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Cengage,