--%>
Assignment Help - homework help

Equilibrium of balance of payments

State mechanism that restores equilibrium of balance of payments in case it gets disturbed below the gold standard.

E

Expert

Verified

Adjustment mechanism under gold standard is known as price-specie-flow mechanism expounded by the David Hume. Under gold standard, disequilibrium of balance of payment will get corrected by counter-flow of gold. Assume that U.S. imports in large amount from the U.K. as compared to the latter. Under the classical gold standard, gold, that is the only mode of international payments, will flow from the U.S. to the U.K. Consequently, the U.S. (U.K.) may have a decrease (increase) in supply of money. Which state that the price level may tend to fall in U.S. and increase in the U.K. Consequently, U.S. products may become more competitive in the export market, on the other hand products of the U.K. becomes less competitive. This modification might improve the U.S. balance of payments and simultaneously hurt the U.K. balance of payments, finally removing the initial BOP disequilibrium.

   Related Questions in Financial Accounting

  • Q : Review the accounting cycle the

    Assignment: The purpose of this assignment is to review the accounting cycle--the procedures that businesses normally use to record transactions during the year and prepare financial statements at the end of the year.  The accounting cycle is discussed in Chapter 3 of your textbook. &nb

    		•
  • Q : Characteristics of Composite currency

    State the characteristics of the Composite currency bonds market instrument.

    		•
  • Q : Major reasons of current account

    In contrast to the U.S., Japan has observed constant current account surpluses. What would be the major reasons for such surpluses? Is it advantageous to have constant current account surpluses?

    		•
  • Q : What is Asset Management Asset

    Asset Management: The Asset management has two common definitions, one associating to advisory services and the other associated to corporate finance. In the initial instance, an advisor or financi

    		•
  • Q : Describe Long Holding Period Describe

    Describe Long Holding Period briefly with suitable example?

    		•
  • Q : Functions of Bank Write some of the

    Write some of the functions of Bank?

    		•
  • Q : Account A structure for showing the

    A structure for showing the effect of market events on a particular asset, liability, equity, earnings, or expense. The effects are measured in terms of dollars. The account looks like as a collection point in the meanwhile the processing of all the transactions involving the balance sheet or inc

    		•
  • Q : Computing cross-rate matrix Compute

    Compute cross-rate matrix for French franc, Japanese yen, German mark, and the British pound. Utilize most recent European term quotes in order to compute the cross-rates in order that the triangular matrix result is same as that of the portion above diagonal in Exhib

    		•
  • Q : Interest rate Give me answer of this

    Give me answer of this question. The prime interest rate usually: A) rises when the Federal funds rate rises. B) rises when the discount rate falls. C) falls when the Federal funds rate rises. D) falls when the Fed sells bonds in the open market

    		•
  • Q : Cross-hedging and its effectiveness

    Discuss cross-hedging and also some of the factors evaluating its effectiveness.

    		•