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“Arguing against globalization is like arguing against the laws of gravity”… This was said by Adam Smith, the father of economics as we now teach it. 

Market exchange rates only apply to goods that are traded. They are not influenced by goods that are not traded. That makes it hard to estimate the real cost of bundles in other countries where costs can be dramatically different. 

The central bank of Thailand found itself with a serious problem with their monetary policy. This is because: 

Suppose that a bundle of goods sells for $425 in the USA and it sells for 12,750 Baht in Thailand. The current exchange rate between the countries is 31.9 Baht/$. The market exchange rate turns out to be the Absolute Purchasing Power Parity rate.  

Suppose that a bundle of goods sells for $412 in the USA and it sells for 12,990 Baht in Thailand.The absolute PPP exchange rate is ____ Baht per dollar.  (Round to TWO digits behind the decimal.)

The lender of last resort is the World Bank. When a country runs out reserve currency, it can request a loan from them. 

The WTO and IMF investigated China and found evidence of currency manipulation. This acted to fuel the trade war between the nations.  

Small countries might choose to fix or peg their exchange rates because this increases stability and allows them to trade in an internationally accepted currency. 

Money supply is the amount of money in circulation in an economy. 

In 2008 a credit crisis spread across the world to Europe. This crisis started in Asia.