Your friend Jin is working at Company AUS Toys, an Australian manufacturing company, selling toys to...
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Your friend Jin is working at Company AUS Toys, an Australian manufacturing company, selling toys to Company Toy Shop. Company Toy Shop also buys toys from Company CNY Toys in China which has fixed exchange rate. Jin's senior manager is complaining about how Australian company is disadvantaged to the company in a country with fixed exchange rate. Jin is not sure about the differences in exchange rate will impact the business dealings with Company Toy Shop. 1. Identify and explain 2 advantages and 2 disadvantages of the fixed exchange rate. (4 marks) 2. Identify and explain 3 determinants of the exchange rate. (6 marks) 3. Explain why senior manager is complaining about the firm in a country with fixed exchange rates. (4 marks) Your friend Jin is working at Company AUS Toys, an Australian manufacturing company, selling toys to Company Toy Shop. Company Toy Shop also buys toys from Company CNY Toys in China which has fixed exchange rate. Jin's senior manager is complaining about how Australian company is disadvantaged to the company in a country with fixed exchange rate. Jin is not sure about the differences in exchange rate will impact the business dealings with Company Toy Shop. 1. Identify and explain 2 advantages and 2 disadvantages of the fixed exchange rate. (4 marks) 2. Identify and explain 3 determinants of the exchange rate. (6 marks) 3. Explain why senior manager is complaining about the firm in a country with fixed exchange rates. (4 marks)
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1 In this circumstance the fixed exchange rate provides two benefits in particular for CNY Toys in China An exchange rate that is set firstly prevents currency volatility A fixed exchange rate guarant... View the full answer
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