Exam questions Essay Example | Topics and Well Written Essays - 1250 words - 1

test questions - Essay ExampleIn addition, exchange place can make it quite difficult or easier for foreign competition to penet stray the local markets. Exchange rates can also have a direct impact on the losses and winningss in a business.Fluctuations in exchange rates can negatively or positively affect both exports and imports. Thus the cost of raw materials that be imported could be more or less on the basis of the exchange rate among two trading nations which may lead to either hard or easy export. When more bills is used in producing goods which are exported to a dissimilar nation with a less currency rate, it leads to those goods creation less priced leading to the business having losses. Because of these changes in exchange rates when importing or exporting, the government gets kindle in the exchange rates between currencies of other countries.Thus whenever goods are produced in a different nation, the government concentrates on selling of those goods so as to get m ore money from other nations from its exports. action of such goods is usually done at belittled prices making use of the currency with the country having low currency rate and then profits are gotten by selling the produce in a country having a high currency rate. Such conversion of currencies in the production as tumefy as selling of a similar product is aimed at earning profit. In addition, the government is dependent on some controls that control the exchange rate and these controls are long-term, medium-term and short-term.For instance, in short-term, the major banks like Central rim operate with foreign markets by either beginning to buy or sell its currency. The interest rate on currency on the medium term can be regulated to make profit only. On the other hand, on the long-term, management of the economy is in such a manner that it results in a direct increase in the have and value of the products manufactured in the nation (imports) with the demand for foreign currency also increasing.For a country