ECONOMICS
BARRIERS TO TRADE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Why do countries need to have a system for exchanging currency with other nations?
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to have a uniform value of currency so they can identify what the value of goods are
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to know which countries’ currency has the greatest value so they can buy goods at the lowest cost
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to know the value of their money compared to the value of other countries’ money so they can trade goods
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to have an international bank that converts the money of each country so countries can buy and sell goods
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Explanation:
Detailed explanation-1: -Aside from factors such as interest rates and inflation, the currency exchange rate is one of the most important determinants of a country’s relative level of economic health. Exchange rates play a vital role in a country’s level of trade, which is critical to most every free market economy in the world.
Detailed explanation-2: -The foreign exchange markets play a critical role in facilitating cross-border trade, investment, and financial transactions. These markets allow firms making transactions in foreign currencies to convert the currencies or deposits they have into the currencies or deposits they want.
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