After completing this chapter, students will be able to: Differentiate between invention, innovation, and technological diffusion; explain how entrepreneurs and other innovators further technological advance; summarize how a firm determines its optimal amount of research and development (R&D); relate why firms can benefit from their innovation even though rivals have an incentive to imitate it. | Chapter 15 The International Monetary Fund Chapter Outline BEFORE THE IMF AND ITS BIRTH FOREIGN EXCHANGE MARKETS TODAY’S IMF THE ASIAN FINANCIAL CRISIS The IMF's Role The International Monetary Fund (IMF) is a location to which member nations can go for expert economic advice. designed to foster trade among its member. the lender for member nations in short-term economic difficulty. not a lender for development purposes. (This is the function of the World Bank.) The IMF’s Birth After World War II the IMF was developed (with the United Nations, the World Bank and the Global Agreement on Tariffs and Trade) to foster economic growth. It was the brainchild of John Maynard Keynes. Trade Requires Currency Trade between countries is beneficial. International trade requires that the currency of the trading partners be exchanged. The market where people come to trade currencies is called the foreign exchange market. . the production and export of a radio can require several currency . | Chapter 15 The International Monetary Fund Chapter Outline BEFORE THE IMF AND ITS BIRTH FOREIGN EXCHANGE MARKETS TODAY’S IMF THE ASIAN FINANCIAL CRISIS The IMF's Role The International Monetary Fund (IMF) is a location to which member nations can go for expert economic advice. designed to foster trade among its member. the lender for member nations in short-term economic difficulty. not a lender for development purposes. (This is the function of the World Bank.) The IMF’s Birth After World War II the IMF was developed (with the United Nations, the World Bank and the Global Agreement on Tariffs and Trade) to foster economic growth. It was the brainchild of John Maynard Keynes. Trade Requires Currency Trade between countries is beneficial. International trade requires that the currency of the trading partners be exchanged. The market where people come to trade currencies is called the foreign exchange market. . the production and export of a radio can require several currency transactions. Foreign Exchange Markets The demand for a currency (say the dollar) is also the supply of the other currency (say the yen). The supply for a currency (say the dollar) is also the demand of the other currency (say the yen). Modeling Foreign Exchange A curve which represents the willingness of those who have Yen to trade them for dollars A curve which represents the willingness of those who have dollars to trade them for Yen Quantity of yen Price of yen in dollars equilibrium exchange rate Who is the IMF and Where Does the Money Come From 182 nations The money that is loaned comes from quotas that are expressed in Special Drawing Rights (SDRs) a made up currency of the IMF that is comprised of a weighted average of the four major currencies of the world (dollar, yen, pound and Euro.) 75% of the quota can be paid in the countries own currency, 25% must be paid in a hard currency currencies easily converted to . Dollars or gold How Decisions are Made Voting is not one country one
