Problem 1.
a) Why do some regions promote unrestricted trade within their region but restrict trade that crosses the region's boundaries?
b) Why would they not extend the advantages of intraregional trade by extending the same privileges to countries outside their region?
Problem 2.
a) Many countries today have exchange rates that float somewhat freely against other countries. How can a business manager, who is responsible for foreign transactions, forecast exchange rates to better manage foreign exchange exposure?
b) Evaluate your contentions in part 'a' of this DQ by:
Reviewing the trends in the exchange rates of the U.S. and one other country over last five to ten years. For example, you might review the United States dollar/Canadian dollar (US$/C$) exchange rate. See the St. Louis Federal Reserve Bank FRED 2 web page for statistics on exchange rates at
https://research.stlouisfed.org/fred2/ => Exchange Rates.
Reviewing the information on exchange rates at University Library => Library Resources => Country Profiles and Economic Data => EIU Country Intelligence => Select the United States of America link. In the scroll box called 'Step 1: choose broad category 'select' 'Exchange Rates' and, in scroll box called 'Step 2': select specific topic 'review the Exchange Rate Forecast and the Exchange Rate Forecast Summary'.
After you have reviewed the above information, discuss the trends you expect in the exchange rate of the US$ and the currency of the other country you chose for this DQ.
Problem 3. Analyze how the foreign exchange market works and how exchange-rate risk is managed.