hello i have attached my Gena project i need you to add on it .
i will add a part of the book i want you to relate it to this project ,
this is the book part below:
“The Gold Standard
In the earliest days of international trade, gold was the internationally accepted currency for payment of goods and services. Using gold as a medium of exchange in international trade had several advantages. First, the limited supply of gold made it a commodity in high demand. Second, because gold is highly resistant to corrosion, it was able to be traded and stored for hundreds of years. Third, because it could be melted into either small coins or large bars, gold was a good medium of exchange for both small and large purchases.
But gold also had its disadvantages. First, the weight of gold made transporting it expensive. Second, when a transport ship sank at sea, the gold also sank to the ocean floor and was lost. Thus, merchants wanted a new way to make their international payments without the need to haul large amounts of gold around the world. The solution was found in the gold standard—an international monetary system in which nations linked the value of their paper currencies to specific values of gold. Britain was the first nation to implement the gold standard in the early 1700s.
PAR VALUE The gold standard required a nation to fix the value (price) of its currency to an ounce of gold. The value of a currency expressed in terms of gold is called its par value. Each nation then guaranteed to convert its paper currency into gold for anyone demanding it at its par value. The calculation of each currency’s par value was based on the concept of purchasing power parity. This provision made the purchasing power of gold the same everywhere and maintained the purchasing power of currencies across nations.
All nations fixing their currencies to gold also indirectly linked their currencies to one another. Because the gold standard fixed nations’ currencies to the value of gold, it is called a fixed exchange-rate system—one in which the exchange rate for converting one currency into another is fixed by international governmental agreement. This system and the use of par values made calculating exchange rates between any two currencies a very simple matter. For example, under the gold standard, the US dollar was originally fixed at $20.67/oz of gold and the British pound at £4.2474/oz. The exchange rate between the dollar and pound was $4.87/£ (which is $20.67 ÷ £4.2474).
ADVANTAGES OF THE GOLD STANDARD The gold standard was quite successful in its early years of operation. In fact, this early record of success is causing some economists and policy makers to call for its rebirth today. Three main advantages of the gold standard underlie its early success.
First, the gold standard drastically reduced the risk in exchange rates because it maintains highly fixed exchange rates between currencies. Deviations that did arise were much smaller than they are under a system of freely floating currencies. The more stable the exchange rates are, the less companies are affected by actual or potential adverse changes in them. Because the gold standard significantly reduced the risk in exchange rates and, therefore, the risks and costs of trade, international trade grew rapidly following its introduction.
Second, the gold standard imposed strict monetary policies on all countries that participated in the system. Recall that the gold standard required governments to convert paper currency into gold if demanded by holders of the currency. If all holders of a nation’s paper currency decided to trade it for gold, the government must have an equal amount of gold reserves to pay them. That is why a government could not allow the volume of its paper currency to grow faster than the growth in its reserves of gold. By limiting the growth of a nation’s money supply, the gold standard also was effective in controlling inflation.
Third, the gold standard could help correct a nation’s trade imbalance. Suppose Australia was importing more than it was exporting (experiencing a trade deficit). As gold flowed out of Australia to pay for imports, its government had to decrease the supply of paper currency in the domestic economy because it could not have paper currency in excess of its gold reserves. As the money supply fell, so did prices of goods and services in Australia because demand was falling (consumers had less to spend)—whereas the supply of goods was unchanged. Meanwhile, falling prices of Australian-made goods caused Australian exports to become cheaper on world markets. Exports rose until Australia’s international trade was once again in balance. The exact opposite occurred in the case of a trade surplus: The inflow of gold supported an increase in the supply of paper currency, which increased demand for, and therefore the cost of, goods and services. Thus, exports fell in reaction to their higher price until trade was once again in balance.
COLLAPSE OF THE GOLD STANDARD Nations involved in the First World War needed to finance their enormous war expenses, and they did so by printing more paper currency. This certainly violated the fundamental principle of the gold standard and forced nations to abandon the standard. The aggressive printing of paper currency caused rapid inflation for these nations. When the United States returned to the gold standard in 1934, it adjusted its par value from $20.67/oz of gold to $35.00/oz to reflect the lower value of the dollar that resulted from inflation. Thus, the US dollar had undergone devaluation. Yet Britain returned to the gold standard several years earlier at its previous level, which did not reflect the effect inflation had on its currency.
Because the gold standard links currencies to one another, devaluation of one currency in terms of gold affects the exchange rates between currencies. The decision of the United States to devalue its currency and Britain’s decision not to do so lowered the price of US exports on world markets and increased the price of British goods imported into the United States. For example, whereas it had previously required $4.87 to purchase one British pound, it now required $8.24 (which is $35.00 ÷ £4.2474). This forced the cost of a £10 tea set exported from Britain to the United States to go from $48.70 before devaluation to $82.40 after devaluation. This drastically increased the price of imports from Britain (and other countries), lowering its export earnings. As countries devalued their currencies in retaliation, a period of “competitive devaluation” resulted. To improve their trade balances, nations chose arbitrary par values to which they devalued their currencies. People quickly lost faith in the gold standard because it was no longer an accurate indicator of a currency’s true value. By 1939, the gold standard was effectively dead.”
———————————————————————————————————————————————————————
Please see the outline below to follow for your GENA project.
GLOBAL ENVIRONMENTAL NEWS ANALYSIS (GENA) PROJECT:
Structure and flow suggestions
Essay Outline
- Introduction
- Introductory information (country, industry, demographics, company information)
- Use GlobalEdge, World Bank, IMF to set up back ground information
- Thesis – What the essay is about? and What will you be talking about in the paragraphs to come?
- Topic Sentence + Stance + Reasons
- Introductory information (country, industry, demographics, company information)
- Body Paragraphs (1-2)
- Write a topic sentence to transition to your current event article
- Article overview and lead into the analysis of the article
- Include details and examples from chosen article
- Provide a summary of any updates (if any) and make sure to cite sources
- Body Paragraphs (3-4)
- Write a topic sentence to transition to what we learned in class
- Use supporting information from book and class to analyze what is going on in the article
- Include things like cultural differences, globalization, anti-globalization, modes of entry, competitiveness analysis, etc.
- Conclusion
- Write a final transition to your analysis of what will happen going forward
- Will there be more (or less) investment?
- How do you think stakeholders will respond?
- Restate your thesis and conclude
- Write a final transition to your analysis of what will happen going forward
Is this the question you were looking for? Place your Order Here
