--%>
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 : State Return on Investment or ROI

    Return on Investment (ROI): It is a performance measure employed to calculate the efficiency of an investment or to compare the effectiveness of a number of various investments. To compute ROI, the advantage (return) of an investment is divided by the

    		•
  • Q : Matlab Applications in Communication

    Communication system is the discipline in engineering curriculum which is more of the conceptual rather than theoretical. Mainly student faces trouble in understanding the core concepts of this topic. We have team of highly competent and prac

    		•
  • Q : Foreign entity’s functional and parent

    Specify some of instances under FASB 52 that foreign entity’s functional currency would be same as the parent firm’s currency.

    		•
  • Q : Evaluation of discount and premium

    Describe how discount and premium are evaluated whenever the assets are priced-to-market. When would law of one price prevail within the international capital markets in case foreign equity ownership restrictions are imposed?

    		•
  • Q : Cross-hedging and its effectiveness

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

    		•
  • Q : Finalization of Accounts What does the

    What does the term Finalization of Accounts mean?

    		•
  • Q : Matlab Applications in Digital Signal

    Digital signal processing appears like a nightmare for students as it is most difficult and tricky subject in engineering core curriculum. If you are getting troubles in digital signal processing assignment or related project, then move

    		•
  • Q : Measures to avoid financial crisis In

    In integrated world financial market, financial crisis in country is rapidly transmitted to the other countries, resulting in the global crisis. State some of the measures would you propose in order to avoid the recurrence of the Asia-type crisis.

    		•
  • Q : Prepare the balance sheet At the end of

    At the end of March, 2006 the balances in the various accounts of TTTTT & Company are as follows: Rs. in million Accounts Balance Equity capital 120 Preference capital 30 Fixed assets (net) 217 Reserves and surplus 200 Cash

    		•
  • Q : Market participants in foreign exchange

    Who are market participants within the foreign exchange market?

    		•