Value of the dollar
- $1 = 500 colones
product made in USA @ $20per.
how much would product sell for in Costa Rica?
$20 500/$1 = 10,000 colones
- 1000c in Costa Rica, what is cost in USA?
1000c x $1/500c = $2
- if $2 = 500c then
product in US costs $20
$20 x 500/2 = 5000
1000c x $2/500c = $4
- discussion of tariffs (taxes) & quotas (production limits)
- WTO, MFN (World Trade Org, Most Favored Nation)
- infant industry argument
- where does comparative advantage come from? govt action
- what determines the value of $$?
- price of € to $
- demand for an economy’s products, investments, etc drives exchange fluctuations (currency valuation)
- foreign investment