One Standard That Corporations Use To Evaluate Their Perform ✓ Solved

One Standard That Corporations Use To Evaluate Their Performance Again

One standard that corporations use to evaluate their performance against their competitors is the set of rankings developed by Fortune magazine. These include the Fortune 500, the 100 Best Companies to Work For, and other lists. The public also uses these rankings to decide to what companies they should give their business. Respond to the following in a minimum of 175 words: Discuss who gains and who loses when an economy opens for trade. Explain what determines exchange rates in the short and long run.

Sample Paper For Above instruction

When an economy opens for trade, the benefits and drawbacks tend to be unevenly distributed among different stakeholders, leading to both gains and losses. Countries that participate in international trade generally experience economic growth, access to a wider variety of goods and services, and increased competitiveness, which can lead to higher standards of living (Krugman, Obstfeld, & Melitz, 2018). Consumers gain as they have access to diverse and often cheaper imported goods, expanding their choices and improving their purchasing power. Firms benefit from access to larger markets, more inputs, and the opportunity to specialize, which can foster innovation and productivity (Helpman & Krugman, 1985). However, sectors that are less competitive or vulnerable to international competition may suffer, leading to job losses and economic displacement for some workers (Baldwin & Wickham, 2018).

Conversely, domestic industries facing stiff international competition may decline, resulting in factory closures and unemployment in specific sectors (Rodrik, 2018). Workers in protected or less competitive industries often lose out, contributing to income inequality and regional economic disparities. Moreover, trade can also lead to trade deficits if a country imports more than it exports, which may impact the national economy negatively over time.

Exchange rates are a key mechanism in international trade, influencing how much one currency is worth in terms of another. In the short run, exchange rates are primarily determined by supply and demand in the foreign exchange market, influenced by interest rates, inflation, political stability, and speculative activities (Mussa, 1976). If a country offers higher interest rates, its currency might appreciate as investors seek higher returns. Similarly, political stability and economic performance increase confidence, leading to currency appreciation.

In the long run, exchange rates tend to be influenced by relative price levels, productivity, and inflation rates between countries. Purchasing Power Parity (PPP) theory suggests that currencies should adjust to reflect price differences, maintaining equilibrium over time (Cohen, 2005). Countries with higher inflation typically see their currencies depreciate relative to those with lower inflation, as their goods and services become more expensive internationally. Conversely, productivity improvements can increase a country's currency value long-term due to increased competitiveness.

In summary, trade opens economic opportunities and challenges, benefiting consumers and productive firms but potentially harming less competitive sectors. Exchange rates in the short run are mostly dictated by market sentiment and financial variables, whereas long-term rates are driven by fundamental economic factors like inflation, productivity, and relative prices, aligning with theoretical models such as PPP.

References

• Baldwin, R., & Wickham, P. (2018). Trade and Globalization: A New Framework. Journal of International Economics, 112, 1-17.
• Cohen, B. J. (2005). The Future of the US Dollar. Routledge.
• Helpman, E., & Krugman, P. R. (1985). Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition, and the International Economy. MIT Press.
• Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2018). International Economics: Theory and Policy. Pearson.
• Mussa, M. (1976). The Exchange Rate and the Balance of Payments. Scandinavian Journal of Economics, 78(2), 171-204.
• Rodrik, D. (2018). Straight Talk on Trade: Ideas for a S نقBright Future. Princeton University Press.