GMS 400 Lecture Notes - Lecture 3: Currency Intervention, Hard Currency, Exchange Rate
6 May 2018
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GMS400 CLASS 3 LECTURE- GLOBAL ECONOMY
Quiz CLASS 4- 10 short answer. Max a sentence for each answer. No names and dates.
North korea update: Kim jong un to have a military weapon parade. With 100 ICBMs. There are going to
become a icbm machine.
Why would he do that? MAD principle.
Right now, the us and china run the world economy. The rest of the world relies on them. What happens
to them impacts the rest of the world. The us accounts for 25% of the world GDP and China is rapidly
catching up. China’s GDP was growing at %. Up until years ago Japan was nd place.
What is PPP? GDP divided by the cost of living.
It shows how affordable is it for people to live in that country.
The big mac index- show how much the relative cost of living. *the cost of a big mac in different
countries*
China has introduced a private sector and has gone global. The basically have bought Africa and
planning to do so in Latin America. They want to invest and go global with their companies.
India has been huge in the tech sector and is moving up the ladder.
Exchange rate for currencies are determined by the free market- the people that actually buy these
currency. It is a snapshot where you are and where you will be in the future in terms of your economy.
Governments can buy the currency at a higher rate to force the exchange rate up and get their allies to
do the same. It is legal.
Developing countries have a soft currency where you can only use and change the currency inside the
country. Often leads to a black market.
The government decides on the rate for export and import rates. Sometimes drives us the cost of living.
BARTER TRADE/ SWING TRADE- you exchange things not for money but for other things.
If the value of the US currency falls ht e value of their own currency will fall as well. They allow the US to
get away with a lot of things for this reason. Such as their growing debt. Some things are sold only in US
dollars around the world- gold, crude oil.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
North korea update: kim jong un to have a military weapon parade. There are going to become a icbm machine. Right now, the us and china run the world economy. The rest of the world relies on them. What happens to them impacts the rest of the world. The us accounts for 25% of the world gdp and china is rapidly catching up. Up until (cid:1007) years ago japan was (cid:1006)nd place. It shows how affordable is it for people to live in that country. The big mac index- show how much the relative cost of living. *the cost of a big mac in different countries* China has introduced a private sector and has gone global. The basically have bought africa and planning to do so in latin america. They want to invest and go global with their companies. India has been huge in the tech sector and is moving up the ladder.
