--%>
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 : Qualitative and Quantitative data What

    What is the difference between qualitative data and quantitative data, provide an example of each.

    		•
  • Q : Problem on prisoners dilemma game Lets

    Lets assume an infinitely repeated prisoner’s dilemma game by two players. The resulting payoffs at each phase by the actions of two players are illustrated below in the table (payoffs are symbolized like (payoff for player 1, payoff for player 2)). Two players

    		•
  • Q : David Hume statement regarding money in

    In modern parlance, David Hume statement regarding money which is Tis none of the wheels of trade. And tis the oil, was referring to the notion that money: (i) is relatively costly to produce. (ii) facilitates divisions of labor and specialization and

    		•
  • Q : Distinguish between the resource market

    Distinguish between the resource market and product market in the circular flow model.  In what way are businesses and households both sellers and buyers in this model?  What are the flows in the circular flow model?

    		•
  • Q : Introduction of the term Cost of

    Give a brief introduction of the term Cost of preference shares?

    		•
  • Q : Affluence tomorrow requires sacrifice

    Explain:  “Affluence tomorrow requires sacrifice today.”

    		•
  • Q : Categorization of economists for buying

    Assume that you bought a ton of gold in Santiago, and Chile for $450 per ounce and immediately sold all of this in Antwerp, Belgium for $480 per ounce. Therefore economists would categorize your movement as: (i) arbitrage. (ii) scalping. (iii) screening. (iv) speculat

    		•
  • Q : Are quantities supplied-demanded equal

    In perfectly competitive market, the market demand curve is given by Qd = 10 − Pd, and the market supply curve is given by Qs = 1.5Ps. a) Prove that the market equilibrium price and

    		•
  • Q : Rightward shift of PPC What was

    What was rightward shift of PPC point out? Answer: It points out growth of the resources.

    		•
  • Q : Transfer income in national income Is

    Is transfer income involved in national income? Explain Why? Answer: No, since transfer income does not effect in the production of services and goods.

    		•