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Summary: This classroom simulation illustrates some basic principles of international finance. Students are grouped into four countries, which are endowed with goods (candy), stock, and domestic currencies. During a brief trading session, students can use their currency to buy domestic goods and assets, or they can convert it into foreign exchange and buy foreign goods and assets. When the trading session ends, students use tables to record each country’s net exports, net foreign investment, foreign exchange transactions, and balances on current and capital accounts. The tables demonstrate that net exports and net foreign investment are equal, and show the relationship between a country’s current account and capital account balances. The four-country simulation described in this article is designed for classes of 17 to 73 students, but the number of countries can be decreased or increased to accommodate smaller or larger classes.
From:
Lori Alden
Summary: This classroom simulation illustrates some basic principles of international finance. Students are grouped into four countries, which are endowed with goods (candy), stock, and domestic currencies. During a brief trading session, students can use their currency to buy domestic goods and assets, or they can convert it into foreign exchange and buy foreign goods and assets. When the trading session ends, students use tables to record each country’s net exports, net foreign investment, foreign exchange transactions, and balances on current and capital accounts. The tables demonstrate that net exports and net foreign investment are equal, and show the relationship between a country’s current account and capital account balances. The four-country simulation described in this article is designed for classes of 17 to 73 students, but the number of countries can be decreased or increased to accommodate smaller or larger classes.
From:
Lori Alden