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By using the reciprocal of the US$ equivalent rate, the currency per US$ rate can be reached and vice versa.
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US$ equivalent rate = currency per US$ rate
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currency per US$ rate = US$ equivalent rate |
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| The exchange rate between two currencies for delivery within two business days |
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The exchange rate between two currencies for delivery in the future.
Commonly 30, 60, 90, or 180 days. |
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| When a currency’s forward rate quotes are stronger than spot. |
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| When a currency’s forward rate quotes are weaker than spot. |
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| The U.S. dollar remains the most used currency in world transactions. |
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But, use of the Japanese yen and EU euro is increasing.
Many expect the euro to become used as frequently as the dollar |
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| Currency exchange rates directly between non-U.S. dollar currencies. |
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| What decides the exchange rates? |
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Real exchange rate vs nominal exchange rate: Purchase Power Parity (PPP) theory
Government control
In general, only the relatively rich industrial countries have few or no currency exchange
BOP and supply-demand relationship |
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| determines the real cost of borrowing |
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| are approximated by subtracting inflation from the nominal interest rates. |
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| Expected High Inflation Rate |
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encourage borrowing, to some extent, because the loan will be repaid with cheaper money.
discourage borrowing
The U.S. prime rate
the London Interbank Offer Rate |
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is simple total of a country’s unemployment and inflation rates.
is a sort of indicator of economic success.
The higher the total score, the worse the economy. |
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| Temporary and Fundamental BOP Deficits |
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| Monetary and Fiscal Policies |
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| These regulate the amount of growth or contraction of a nation’s monetary stock |
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| These regulate a government’s money receipts through taxes and its expenditure |
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Definition
Gross National Product (GNP)
Gross Domestic Product (GDP) |
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| Gross National Product (GNP) |
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| The total of all final goods and services produced by a country |
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| Gross Domestic Product (GDP) |
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| The total of all final goods and services produced in a country. |
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Term
| In order to compare the purchasing power of nations |
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| Managers need to know among how many people an increase in GNP or GDP is divided |
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| GNP/Capita and GDP/Capita |
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| Generally the higher the value, the more advanced the economy. |
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| A measure of how a nation’s income is apportioned among its people |
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| Data on Income Distribution are |
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Definition
gathered by the World Bank.
published yearly in the World Development Indicators. |
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Disposable income
Discretionary income |
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| The amount of income left after paying taxes |
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Disposable income minus essential purchases
Disposable income and discretionary income data are available in the UN Statistical Yearbook.
More detailed expenditure patterns can be found in the World Development Indicators. |
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Population Density
Concern in Developed Nations |
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| Concern in Developed Nations |
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Declining birthrates are causing concern in the governments of industrialized nations.
By the year 2025, the present 11 percent unemployment rate in the EU will be replaced by a shortage of workers.
In the year 2025, Japan’s population age 65 and older will make up 26.8 percent of its total population. |
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A measure of the number of inhabitants per area unit.
Densely populated countries tend to make product distribution and communications simpler.
Less costly than less densely populated countries |
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The unique lifestyle of a particular group of people that includes beliefs, rules, techniques, and institutions that characterize human populations.
Consists of learned patterns of behavior common to the members of a given society - Culture is learned, not innate |
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| Learning to live with other cultures |
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Definition
First, realize that there are many different cultures.
Then, learn the characteristics of those cultures.
Spend a lifetime in a country.
Undergo an extensive, highly sophisticated training program that covers the main characteristics of a culture. |
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This cultural characteristic probably presents more adaptation problems for Americans overseas than any other.
Time is important in the U.S., but not very important in Latin American or Middle Eastern countries. |
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Americans and Asians are accustomed to the rapid acceptance of something new.
Europeans are fond of reminding Americans that they are a young nation lacking traditions |
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| is responsible for many of the attitudes and beliefs affecting human behavior. |
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Protestant:
Europeans and Americans generally view work as a moral virtue and look unfavorably on the idle.
“American live to work, Germans and Mexicans “work to live.”
Confucian: In Asian countries, this is the same as Protestant |
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A conglomeration of religions, without a single founder or a central authority.
Practiced by more than 80 percent of India’s population. |
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| This religion began in India as a reform movement of Hinduism |
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| taught that people bear the principle of unselfish love for others. |
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| is a mystical philosophy founded by Lao-tzu, a contemporary of Confucius |
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| Hindusim, Buddhism, Confucianism, Taoism, Feng Shui, Shintoism |
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| Belief is based on the concept that if human-made objects are placed in harmony with nature, they can bring good fortune |
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| legends define the founding of the Japanese empire as a cosmic act, and the emperor was believed to have divine status. |
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Has about 1.1 billion followers
This youngest faith is the second largest after Christianity (2 billion adherents).
Founder is Muhammad
Muhammad was not only the prophet of God but also the head of state.
In Muslim nations, there is no separation of church and state. |
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When technology sold to companies in another nation is used to produce goods to compete with those of the seller of the technology.
Firms sometimes fear to sell their technology abroad |
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The emigration of highly educated professionals to another country.
Resulted from developing nations overinvesting in higher education in relation to the demand for students. |
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The return of highly educated professionals to their home countries.
Korea and Taiwan are luring home Korean and Taiwanese engineers and scientists. |
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