Imports impact the economy in several aspects. For example, at the micro level, imports affect competition by increasing supply in the domestic market. Consequently, there is more pressure on prices and profitability in the domestic market.On the
Exchange Rate
Why Countries Import: A Look at Factors Affecting Imports
Availability is one of the fundamental factors affecting imports. We import goods from abroad because they are unavailable in the domestic market. For example, the domestic economy does not produce them because the geographical location does not
Real Exchange Rate: Understand Currency Values & Trade Impacts (Formula, Calculation, Determinants)
What's it: The real exchange rate is the price of one currency against another currency adjusted for differences in the price levels of domestic and foreign prices. The aggregate price level measure is inflation, which shows you the currency's
Purchasing Power Parity Explained: Unveiling True Costs (Calculation, Pros, Cons)
What's it? Purchasing power parity (PPP) is an economic concept for equalizing the price of a set of identical items across different locations. In other words, these goods should be priced at the same level in various countries.The concept works
Currency Appreciation: Causes, Impact on Trade, Exports, Imports & More
What's it: Currency appreciation is when the exchange rate of one currency against another currency increases. One unit of currency can buy more of another currency.Appreciation makes foreign products cheaper for domestic buyers, thus
Understanding Currency: History, Types, Exchange & Global Impact
What's it: Currency refers to the money accepted and used as legal tender in a country. It includes banknotes and coins you use daily. The central bank or authority acts as the sole supplier and monitors its circulation in the
Currency Crisis Explained: Causes, Impacts & Solutions
What's it: A currency crisis is a situation in which the exchange rate of a currency falls, causing a sharp decline in foreign reserves. The fall was possible due to a brief bout of speculation on the foreign exchange market. Simultaneously, the
Exchange Rates Explained: Impact on Trade & Investment (Types, Determinants)
The exchange rate is the fundamental mechanism that allows countries to trade with each other. It essentially tells you how much of one currency you need to exchange to get another currency. Imagine you're an American tourist in Italy and want to buy
Currency Depreciation Explained: Impact on Trade & Investment (Causes, Impacts)
Currency depreciation is a decrease in the purchasing power of domestic currency against other currencies. Currency depreciation has considerable impacts on the economy, particularly international trade and international financial