Questions and Answers
Americans buy cell phones and clothing made in China, computers assembled in Singapore, and fruit grown in Chile. But global business deals aren’t limited to goods and services. Individuals, companies, and governments also invest abroad, buying and selling stocks and bonds in financial markets around the globe. The magnitude of the international flow of goods, services, and assets is impossible to ignore. To understand the nature of these transactions, we must become familiar with a key tool that makes this trade possible: exchange rates. Whenever you buy something that has been made abroad, whether it is an article of clothing, a car, a stock, or a bond, someone somewhere has exchanged dollars for the currency used where the item was made. The reason is simple:.
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What makes global business deals possible?
Exchange rates
What is included in the volume of international transactions mentioned in the text?
Exports and imports of goods and services
What do individuals, companies, and governments do in the global market, as per the text?
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What happens when buying something made abroad?
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What is impossible to ignore, according to the text?
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Study Notes
Global Trade and Exchange Rates
- International transactions (exports and imports of goods and services) equal more than half of the world's GDP.
- Examples of imported goods and services include cell phones from China, computers from Singapore, and fruit from Chile.
- International business deals involve not only goods and services but also investments in stocks and bonds across global financial markets.
- The magnitude of international trade in goods, services, and assets is significant and cannot be ignored.
- Exchange rates play a crucial role in facilitating global trade, as they enable the exchange of currencies between countries.
- Whenever a product made abroad is purchased, someone has exchanged the local currency (e.g., dollars) for the currency used in the product's country of origin.
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