(GS804)Reflection on price level and the exchange rate in the long run

Name:Tai ZhengWen Student number:22-618685

Price level and the exchange rate in the long run are two important concepts in
macroeconomics. They are closely related and have a profound impact on
international trade and financial markets. During the learning process, I gained a
deeper understanding of these two concepts and realized their importance to economic
operations.
First, the long-term price level, usually referred to as the inflation rate, is a
measure of the purchasing power of a country's money. During the course, I learned
how inflation affects a country's internal and external economy. An increase in the
inflation rate will lead to money devaluation, which will in turn affect the living
standards and international competitiveness of domestic residents. This concept gave
me a better understanding of the importance of central bank policy in controlling
inflation and stabilizing domestic price levels. At the same time, I also learned about
the negative effects of deflation on the economy, including increased unemployment
and reduced production. This knowledge is important for understanding the
formulation and implementation of macroeconomic policies.
Secondly, exchange rate is the relative price between currencies of different
countries and is also one of the core factors of international trade. During the course, I
learned about different exchange rate systems, including fixed and floating exchange
rate systems, and their impact on international trade and capital flows. I understand
how exchange rate fluctuations affect a business's international competitiveness and,
in turn, the profitability of international trade. In addition, I also learned about
exchange rate policy and the impact of foreign exchange market intervention on
exchange rates, which is a powerful tool for national governments to use to intervene
in the domestic economy.
In this course, I learned that long-term price levels and exchange rates are two
important aspects of macroeconomics that interact with each other to shape a
country's economic conditions. Understanding their changes and impacts can help
entrepreneurs, government officials, and investors make better decisions to adapt to
the changing international economic environment. At the same time, this course also
made me realize the importance of international cooperation and policy coordination
in maintaining global economic stability, because fluctuations in international
exchange rates and price levels can have a profound impact on global trade and
financial markets.