Week 14-15: The Balance of Payments, Foreign Exchange Markets, and Exchange Rates
This week, we will discuss the meaning and functions of the foreign exchange market, different exchange rate systems, how exchange rates are determined in different systems, Know what the spot, forward, cross, and effective exchange rates are, Understand the meaning of foreign exchange risks, hedging, speculation, and interest arbitrage. We will learn the purchasing-power-parity theory and why it does not work in the short run, understand how the monetary and the portfolio balance models of the exchange rate work
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Course Material
- Week 1-2: Introducing International Trade Theory, Law of Comparative Advantage
- Week 3-4: The Standard Theory of International Trade, Offer Curves, and the Terms of Trade
- Week 5-6: Factor Endowments and the Heckscher–Ohlin Theory
- Week 7-8: Economies of Scale, Imperfect Competition, Economic Growth and Trade
- Week 9: Mid Term Exam
- Week 10-11: Trade Restrictions: Tariffs, Nontariff Trade Barriers, and the New Protectionism
- Week 12-13: Economic Integration, TOT, Trade & Economic Development, WTO
- Week 14-15: The Balance of Payments, Foreign Exchange Markets, and Exchange Rates
- Week 16-17: Open-Economy Macroeconomics: Adjustment Mechanisms and Policies
- Week 18: Final Term Exam
- Chapters 10
- Department Economics
- Teacher
Dr. Jabbar Ul Haq
