Small Successful European Economies Essay Example | Topics and Well Written Essays - 1000 words

Small Successful European Economies - Essay Examplesince the comparison is calculated as a difference of the unadjusted weighted averages, the exchange rate can either be positive or negative. A nominative exchange rate greater than 1 signifies that the currency of the home country is worth(predicate) more than the foreign currency against which it is being compared. Any value below 1 would be the opposite. such(prenominal) a calculation enables consumers to determine the relative price they pay for an imported good and helps them determine whether their consumption is worth more or less for the imported goods in comparison to the local currency.The Danish economy, which was agrarian in nature until the 1970s and had been facing problems with restrictions by the EEC members, could not afford to take prefer of a high growth period during the 60s. since then, the contribution of the services sector including segments such as wrench and shipping has grown much more in comparison to the contribution from agriculture. Even manufacturing took a backseat with a large part of the workforce being employed in the services sector as manufacturing, which was subject on international exports faced stiff competition. As such, this decade started to witness a marked plus in the number of companies that could thrive internally and the relevance of companies that were dependent on doing business with external entities began to diminish. This was too the time when Denmark joined the European exchange rate cooperation and the higher rate of inflation that was a issue of the severe stress put on the Danish economy resulted in a negative nominal exchange rate. The marked spike in public spending combined with a squeeze on international exports also contributed to the low nominal exchange rate in comparison to the later years.The legitimate effective exchange rate is a weighted range of an economys currency in comparison to the collective index of major traded currencies a fter adjustments for the effects of inflation. These