State in brief about the monetary effects, Business Law and Ethics

Assignment Help:

State in brief aboput the Monetary Effects

Besides real income effects there will also be monetary effects if nations seek to intervene in foreign exchange markets which government do to influence value of their exchange rate. This is done by either buying or selling foreign exchange. However, as foreign exchange constitutes part of a country's high powered money supply this affects the quantity of money in the economy. If the country has less than fully flexible exchange rates this provides another linkage between countries. If a country is expanding its domestic money supply which results in an increase in its imports. This will improve the balance of payments of the foreign countries with whom it is trading. In the absence of exchange rate intervention the value of the foreign currency may appreciate against the country's currency.

If this is viewed as undesirable the overseas government will sell its own currency and buy the country's currency on foreign exchange markets. The effect will be that the foreign country will go on accumulating the country's currency. The result will be an expansion in its level of high powered money. This is turn will lead to a multiple expansion in that country's own money supply. Clearly, domestic monetary policy affects aggregate demand and economic welfare in other countries. Only if exchange rates are completely flexible will there be no monetary effects.

 


Related Discussions:- State in brief about the monetary effects

General crossing - crossing on a cheque, General Crossing - Crossing on a C...

General Crossing - Crossing on a Cheque Section S.76 (1) since such provides about whenever a cheque bears across its face an addition of described below: The words such

Compulsory liquidation - winding-up, Compulsory Liquidation :          ...

Compulsory Liquidation :                                       A petition is presented to the High Court under s.218 of the Companies Act.  The petition will specify one of the

Regulations regarding fire, REGULATIONS REGARDING FIRE : Fire accidents in...

REGULATIONS REGARDING FIRE : Fire accidents in educational institutions are much less as compared to those in residential, commercial or industrial areas. This is a general observ

Discuss the principles of the substantive law, Munsami was driving his car ...

Munsami was driving his car registration number CB 713 from Nausori to wards Suva. He was travelling at 80kmph on 50kmph zone. At koronivia a taxi driven by Ram Raji of Koronivia,

Business law questions, I am Lauren Garcia, I have an order my assignment, ...

I am Lauren Garcia, I have an order my assignment, please answer me back here Describe what parts of business law are involved in the following scenario. What issues are involve

Domicile of dependence, Domicile of Dependence Moreover this is the do...

Domicile of Dependence Moreover this is the domicile a person acquires by virtue of legal dependency. Hence it is determined through the domicile of the other person. Howev

What are the limitations imposed on banks by the banking act, QUESTION 1 ...

QUESTION 1 (a) Under which circumstances can banking information on customers be disclosed and at the same time not breaching the confidentiality clause of the Banking Act (

Ddisadvantages - mergers and winding up, Ddisadvantages - mergers and windi...

Ddisadvantages - mergers and winding up: The disadvantages of s.280 are that cash may have to be provided to pay off creditors and dissenting members or alternatively the sale

Wishes of members of parliament -disadvantages law, Wishes of members of pa...

Wishes of members of parliament -Disadvantages law: However acts of Parliament do not reflect the wishes of the people as voters although the wishes of the individuals that wh

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd