--%>
Assignment Help - homework help

Government Pegged Currencies

Question:

If a government pegs the value of its currency to another currency, the government must stand ready to i. _________________________ the "hard" currency to defend the pegged value of its own currency. ii. Briefly Explain?

Answer:

Suppose the value of one of the pegged currencies falls. In that case, the businesses in that country will see an unprecedented increase in their costs and hence, might incur heavy losses. This might affect the sector and the economy as a whole adversely. In that case, the government and the central bank of that country must be ready to provide the currency against which its own currency is pegged so that the depreciation is controlled.

 

 

   Related Questions in Business Economics

  • Q : Demand often exceeds supply and supply

    “In the corn market, demand often exceeds supply and supply sometimes exceeds demand.” “The price of corn rises and falls in response to changes in supply and demand.” Among these 2 statements used correctly which in the terms “supply&rdq

    		•
  • Q : Demand forecasting techniqes

    simultaneous method in demand forecasting?

    		•
  • Q : How is productivity of labor based

    In Wealth of Nations by Adam Smith, opined that the productivity of labor based primarily on: (w) workers’ education. (x) divisions of labor. (y) technologically advanced machines. (z) suitable wage rates.

    Q : Goods and services are scarce because

    Explain:  “Goods and services are scarce because resources are scarce.”  Analyze:  “It is the nature of all economic problems that absolute solutions are denied us.”

    		•
  • Q : Competition is the essential despot of

    Evaluate and explain the statements: “Competition is the essential despot of the market economy”.

    		•
  • Q : Describe High operating leverage

    Briefly describe High operating leverage?

    		•
  • Q : Characteristic of an oligopolistic

    Which of the given is a quality of an oligopolistic market structure? w) There are only some dominant sellers. x) every firm sells a unique product. y) this is easy for new firms to enter the industry. z) Each firm require not react to the actions of

    		•
  • Q : Heterodox pricing process Compare the

    Compare the costing and pricing process of heterodox pricing process to the procedures utilized in neoclassical microeconomics to set prices.  In what ways are heterodox prices altered from neoclassical prices?

    		•
  • Q : Why Trade barriers hurt American

    Why Trade barriers hurt American consumers?

    		•
  • Q : Major implication of invisible hand of

    The major implication of Adam Smith’s conception of an “invisible hand” was such that: (w) pursuit of individual self interest must be controlled. (x) most people lose sight of what’s good for society. (y) most

    		•