Question

Write a paragraph on article " Buck Up"
question : "Why Grassman's Law is incorrect and how invoicing imports in dollars can create issues with trade"

Answer 1

Dear Student,

Please find below answer to your questions

A) Paragraph on article "Buck Up"

Abstract

This article is written about how the currencies are crashing and lead to loss to economy as a underlying factors.

Sometimes it make imports more expensive, cutting into household budgets and raising businesses’ costs..

More expensive imports should drive new demand for home-made replacements and thus for the workers who make them, geeing up the economy

A devalued currency always can make exports suddenly cheaper to foreign buyer and it can boost demand for product and services.

For Example., When the value of the Colombian peso collapsed in the summer of 2014, It was considered a boon to economy in hope that it will increase the export and rise employment for country,

But it wasn't happened because Colombia does not trade in pesos. It trades almost exclusively in dollars; 98% of its exports are invoiced in them.

The amount of trade carried out in American dollars vastly exceeds the amount that America imports and exports.

A real fact experienced reasearch suggests that the dollar’s prominence in trade undermines the advantages which flexible exchange rates are meant to offer. And when the dollar strengthens, global trade tends to contract.

B) Reason behind Grassman's Law is incorrect

Grassmann's laws describe empirical results about the concept of mixing colored lights that was composed with several power distribution centers and organized algebraically to one another in a color matching context.

This law is related to principles used to predict color match responses to a good approximation under photopia and metopic vision.

Grassmann’s laws are tested by what is called a symmetric-matching experiment: An observer compares two lights that are presented on identical backgrounds and with a visual system adapted the same for both sides of the match

Below are the reason for Grassman's Law is incorrect

1. The physiological basis of metamerism(and Grassmann's laws is the equality of the cone photoreceptor outputs, But it does not happened and the principal it void.
2. It is assumed that for two lights to be metameric each type of the photoreceptor cones should respond equally to these lights , But it failed to match correctly.

C) Import invoicing in dollars can create issue with trade

As we know that Dollar is dominant currency in world trade. Also International trade is increasingly dominated by intermediate goods and global value chains

If we look at the practical aspects most databases for international trade only record gross trade flows, and do not distinguish between intermediate and final goods, and whether an import is used for domestic consumption or reexport.

For Example,Intermediate exports first used by direct importer to produce intermediate exports, which are subsequently shipped back to the source i.e. exporting country as intermediate imports to produce final goods.

Within this, the share of the component that is ultimately absorbed in the original source country experiences a persistent decline.

This is in line with the with the patterns above as well as with the insights obtained form the model, as the higher dollar makes bilateral back and forth trade more expensive than domestic goods

This makes difficult tot trade with the the rest of the world as well as trade within the region in denominated in the hard currency of the global market i.e. dollar invoicing.

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