Switzerland Country Analysis Assignment Example | Topics and Well Written Essays - 1000 words

Switzerland rural Analysis - Assignment ExampleIn this regard a brief consideration of devaluation and revaluation of m unrivaledy as a combat measure against strong or weak m integrityy have been taken into account. More over the law of one harm along with PPP has too been considered. The short fall of heavy(p) Mac index, in order to project as an accu browse measurement of price level has also been discussed. The PPP of the bear on country has been measured and compared with the exchange rate of Switzerland with that of USD (US Dollar). At the end there is a brief consideration of the evolution of Swiss monetary system with special emphasis on cave in exchange rate arrangements and if that has anything to do with the recent financial crisis. The pivotal point of this paper revolves around the item that whether exchange rate has anything to do with commerce environment? Its cor recounting with recent financial crisis and the inter relation between per capita purchasing po wer parity, exchange rate of Swiss currency with that of Euro and USD. Exchange rate and their make on the business activities The common notion that business activities are subject to turbulent time encounters a pause regarding exchange rate. Exchange rate fluctuations often leave severe impact on business activities and that for obvious reasons. A weak currency leads to decline of the price of the exports and decline in price apparently leads to a rise in demand of that particular product. Eventually that product occupies lions care of the global market. On the other hand a strong currency weakens the profit margin of the concerned country. If a company sells in a country with strong currency and pay the workers that belongs to it in weaker currency obliviously it ends up as profit maker. If a government lowers the value of its currency thus makes it weak therefore it is reckoned as devaluation and the opposite is called revaluation with exactly reverse consequences. This impl ies movement of exchange rate in an adverse way is detrimental to the managers of both the countries especially if there is a price war.. The unpredictability of exchange rate only adds to the risk of business environment and that ends of as a catastrophic consequence (Hollensen, 2009). The law of one Price The law of one price stands for an identical product must(prenominal) have an identical price in all countries when price is expressed in a common denominator currency. For this principle to apply products must be identical in quality and content in all countries, and must be solo produced within each particular country (Hollensen, 2009, p.203) This particular theory of pricing falls short of one common logic that is extremely relevant in modern world the law of absolute and comparative degree advantage. In this era of globalization the law of one price indicates to self sufficiency and entirely ignores the magnificence of international trade. However in order to overcome thi s major bottleneck Big Mac price has been resorted. (Hollensen, 2009) The Big Mac Price Index and its shortfall The Big Mac Price Index has derived its piddle from McDonalds Big Mac. McDonald has one of the largest restaurants over the world and Big Mac is produced and sold in over 120 countries. Assuming that the company sticks to the exact material and quality, the concerned product has occupied a give where it can be