Macro 22
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This document contains a lecture on macroeconomics and international exchange rates. It discusses several key concepts: 1) Arbitrage is the practice of taking advantage of price differences between markets to make riskless profits. The document provides an example of arbitraging the dollar-yuan exchange rate. 2) The law of one price states that in an efficient market, identical goods must have only one price after transaction costs. Arbitrage helps enforce this law by bidding up low prices and bidding down high prices. 3) Exchange rates between currencies can fluctuate based on demand and supply factors like interest rates. The value of a currency may rise or fall depending on whether demand for it is increasing or decreasing
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Macro 22
- 4. Quiz Master
- 5. What country was the focus in the movie Poverty, Inc? Quiz
- 6. Worldview What is True? What is Good? What is Beautiful?
- 7. Worldview Who are We? What is our Purpose?
- 8. Worldview What you see What you think What you do Life begins with perspective
- 9. ALL HUMAN BEINGS—male and female—are created in the image of God. Each is a beloved spirit son or daughter of heavenly parents, and, as such, each has a divine nature and destiny
- 10. What is Critical Thinking? Critical thinking is the intellectually disciplined process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and/or evaluating information gathered from, or generated by, observation, experience, reflection, reasoning, or communication, as a guide to belief and action.
- 11. Critical Theory Critical Race Theory Social Justice Woke Identity Politics Intersectionality
- 12. Critical Theory is not Critical Thinking
- 13. What is Critical Theory? Critical theory is an ideological worldview, which often operates like a religious theology.
- 15. Critical Social Justice Theory versus The Restored Gospel
- 16. Why Latter-day Saints Should be Concerned about Social Justice Ideology Rebecca Taylor August 9, 2020 Meridian Magazine
- 18. Binary World Oppressors vs. Oppressed Victims vs. Victimizers Privileged vs. Marginalized
- 19. Differences in culture, language, gender, race, and nationality fade into insignificance as the faithful enter the covenant path and come unto our beloved Redeemer. [May we] overcome any burdens of prejudice and walk uprightly with God—and with one another—in perfect peace and equity.”
- 20. CSJ Born guilty Original Sin LDS Born innocent
- 22. CSJ Forced to obey Agency LDS Free to act for ourselves
- 23. CSJ No universal truths Objective Truth LDS Truth is objective and absolute
- 25. The logic, reason, argument, and evidence to support the claim The identity of the person making the claim
- 28. Dimension CSJ LDS Identity Social Group Individual Child of God Original Sin Born Guilty Born Innocent Purpose of Life Equity Social Justice Become Like Christ Agency Forced to Obey Free to Act for Yourself Objective Truth No Universal Truths Truth is Objective and Absolute Authority Lived Experience Prophet, Apostles, Scripture Responsibility Blame System Be Accountable Family Oppose Traditional Family Family is Ordained of God
- 29. Does it lead to Christ?
- 31. Chapter 20 Exchange Rates Arbitrage Law of One Price
- 33. Arbitrage Buy Low Sell High Time Geography
- 36. $5.00 Yuan 20
- 38. $5.00 $3.20
- 39. one unit of this will buy ___ units of that
- 42. Why buy Dollars? Buy American Stuff Invest in America Hold and Hope
- 43. Why buyYuan? Buy Chinese Stuff Invest in China Hold and Hope
- 44. Demand Dollars Yuan Per Dollar Supply Higher U.S. Interest Rate 6.44 6.50 Depreciating Cost more to buy a dollar Losing Value
- 45. Demand Dollars Yuan Per Dollar Supply Lower U.S. Interest Rate 6.44 6.25 Appreciating Cost Less to buy a Dollar Gaining Value
- 46. Big Mac Index
- 47. Big Mac Index Country Currency Price Rate Dollars Phillipines Peso 140 0.019 $2.66 Vietnam Dong 65,000 0.000043 $2.80 China Yuan 20.50 0.15 $3.08 Saudi Arabia Riyal 12 0.265 $3.18 Switzerland Franc 6.5 1.0 $6.50
- 48. Arbitrage Buy low and sell high Buy here and sell there Buy today and sell tomorrow
- 49. Arbitrage Are the price differences different than the exchange rate? If so, buy low and sell high
- 50. The Law of One Price Arbitrage closes price gaps Bid up the low price - Demand Bid down the high price - Supply
- 51. 1.00 Dollar to 6.92 Yuan USD to CNY $ to ¥ $ 5.00 x 6.92 = ¥ 34.60 ¥ 30.00 ÷ 6.92 = $ 4.34
- 52. $ 5.00 $ 4.34 increase demand increase supply $ 4.67 one price Price Arbitrage Arbitragers
- 53. Arbitraging 1. Pick a product and review the prices in both countries 2. Are the prices different than the exchange rates? 3. Buy currency in the low priced country 4. Buy the product in the low priced country 5. Move to the high priced country 6. Sell in the high priced country
- 55. 1.00 Dollar to 51.91 Peso USD to PHP $ to ₱ $ 50.00 x 51.91 = ₱ 2,595 ₱ 1,973 ÷ 51.91 = $ 38.00
- 56. $38 $40 $40 Supply More Supply Demand More Demand Price Quantity Price Quantity Demand Supply $50 ₱ 1,973
- 57. Cost? Arbitraging 1. Traded $38 for ₱ 1,973 2. Bought shoes for ₱ 1,973 3. Shipped to U.S. 4. Sold in U.S. for $50 5. Traded $38 for $50 6. Made $12 on $38 7. Made 31 percent profit 8. Repeat
- 58. 1. Dollar to Won (KRW) rate is 1 to 1,176 2. Cell Phone in U.S. is $600 3. Same Cell Phone in South Korea is 600,000 4. Cost to ship is $5 5. What should you do and how much will you make? Dollars and percent?
- 59. Economics The study of how human beings create value for one another