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
What Are the Factors Affecting Imports?
Availability is a factor 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 support them. Another
How Exchange Rates Affect Aggregate Demand and the Economy
Exchange rates affect aggregate demand through their effects on exports and imports. Specifically, it affects the relative prices of imported or exported goods and, ultimately, their competitiveness and demand. For example,
Real Exchange Rate: How To Calculate, Impacts, Determining Factors
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: Formula, 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. Long story short, these goods should be priced at the same level in various countries. The
Currency Appreciation: Meaning, How It Works, Causes, Effects
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
Currency: Types, Purchasing Power, Exchange Rates
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: Causes, Signs, Impacts and Possible 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 Rate In Economics: Types, Effects, Determining Factors
Exchange rate represents the price of one currency when we exchange to another currency. For example, the current exchange rate of Rp/USD is 14,000. USD is the base currency or base currency (foreign currency), and Rp is the price currency (local