ECN 601 Topic 8 Problems Chapter 11 Grand Canyon
G11-2: Exchange Rate Effects on your Firm The equilibrium often entails a supply and a demand factor. Despite that a country’s currency value may fluctuate over a period, it must be noted the supply and demand for oil does not change. The petroleum industry for example is known for domestic oil refinery. The production of petroleum products within the US or globally is done with the general idea for profit for its shareholders and investors. If it can be acknowledged that a change in interest rates affect foreign currency exchange so too does it on international economics. A change in the exchange rate impacts the price and quality of the petroleum products. This impacts the ways companies in the industry make profits in the present and predict future changes in the exchange rate.According to Farley (2019) “Crude oil is quoted in U.S. dollars (USD).” This indicate countries such as the U.S that buys crude and make products are benefactors of the petrodollar system.
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