1.Let us assume that China agrees to move to a floating exchange rate for its currency in the International Market. Assume also that it is implemented in stages over three years per an agreement with the WTO. What would be the effects of this new exchange rate regime on A. China B. U.S. and C. world trade patterns?
2.Since General Motors has seen a much higher growth rate in sales in China than most other areas, it has decided to build two new factories in China. What difficulties might it encounter in these endeavors? Should it partner this endeavor with a Chinese company? Why?
3.What arguments might you make for the world to return to a fixed exchange rate system in today’s market? Might this be a method to reduce the large imbalances that several Asian countries hold mostly in U.S. dollars and Euros? What arguments might you make against such a move?
(use material from additional Materials- chapter9-11 ppts)