Unit 2 Discussion
Question Description
I’m working on a business question and need guidance to help me learn.
Q1. High interest rates are commonly expected to strengthen a countryàcurrency because they can encourage foreign investment in securities in that country, which results in the exchange of other currencies for that currency. Yet, the pesoàvalue has declined against the dollar over most years even though Mexican interest rates are typically much higher than U.S. interest rates. Thus, it appears that the high Mexican interest rates do not attract substantial U.S. investment in Mexicoàsecurities. Why do you think U.S. investors do not try to capitalize on the high interest rates in Mexico?
Q2. Economic sanctions have often been used by the U.S. and other countries to alter the behavior of the target countries. These sanctions typically include general or selective trade embargoes, restrictions on foreign investment, and restriction on travel to and from the affected country. What do you think the effectiveness of economic sanctions in recent history? Give examples and support your arguments with data.
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