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Q: What thing of value does the government provide those who hold us currency?
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Continue Learning about Economics

Why do economists say there is no such thing as a free lunch?

It relates to the notion that government aid programs (like those that provide free food) are paid for by taxpayers.


What currency is used in international trade?

When the United States buys goods from another country, it will usually pay for those goods in the currency of the exporting country.


How does China peg the yuan to the dollar?

Supply and demand will cause all fiat currencies to rise and fall in value depending on how much effort humans are willing to spend in order to acquire that currency. This is a universal law that cannot be broken.However, governments can 'peg' their currency to another currency if they want. That Government has to watch the exchange rate between their currency and the pegged currency very closely.If a group of workers in a city collectively decide for themselves that the yuan they own is worth more than the 6 dollars they would get in exchange for it, then the currency becomes more valuable. Immediately value has gone up and no law can stop that. The government must work to cause and equal and opposite reaction to get those workers to think that the Yuan is worth less. Governments have many tools to do this.The national bank of the government doing the pegging must hold large reserves of the foreign currency to mitigate changes in supply and demand. If a sudden demand for a currency were to drive up the exchange rate, the national bank would have to release enough of that currency into the market to meet the demand. They can also buy up currency if low demand is lowering exchange rates.The government entity that coins money is told to "create more money from thin air" and gives that money to banks in the form of low interest loans. Thus flooding the market with currency as bankers make high risk investments, making currency easier to come by for workers, money becomes easy to get, the value goes down as a result.The government can do the opposite, refraining from giving more money to the banks, making the banks take less high risk investments, money becomes harder to get, people re-value the currency.The government uses this like a gas petal on a car, to keep the speed the same, you must press harder when your going up a hill, and press less when your going down a hill.If the government stops doing this, the currency will immediately fluctuate and will no longer be pegged.


What is clean note policy?

In clean note policy, there is no currency exchange rate manipulation, no excess supply of currency notes,swapping etc. those which control the financial market artificially.


Why do some people think capitalism is the best form of government?

Capitalism is not a form of government. Communism is not a form of government. Socialism is not a form of government. All three of those are economic forms, not forms of government.

Related questions

What were markets like in Jesus time?

There were currency also in those days, the money was quite different then today. They had the shekel then, as it is mentioned in the parable. But at the same time they had a roman currency as well. This was to be used to pay taxes to the Roman government.


What services do the US government provide for its people?

All those services which are provided by a good government of any country to its people .


What food was used as currency in world war 2?

Food could have been used as currency in World War 2. Since most of the food went to those in the service, the government gave out food ration stamps, which acted as currency.


Will the government provide grave markers for soldiers killed in action?

The government does supply grave markers for those killed in action. There is typically not a cost for this.


What is the difference between a central government and a federal government?

There is no difference between a central government and a federal government. Both of those types of government do the same thing. The only difference is in the name.


What are the functions of euro-currency loans market?

One main function of euro-currency loans markets is to match up suppliers with consumers. Another function is to provide loans that are cheaper than those you would receive in a domestic bank.


What are some companies that provide defense contractors to the US government?

There are numerous companies that provide defense contractors to the US government. Some of those companies include Aerojet, General Atomics, Quantum3D, Remington Arms and IBM.


How did the great depression change peoples views about government?

the great depression affected the citizens very much, it changed their views about the government as to how government dealt with situations wrongly. The government obviously introduced a currency and got rid of all the old currency (by burning) as it was worthless. The people didn't like the government as they though they were responsible for the depression and so this is why riots were started.


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What are the most important duties of government?

Government's important duties include making laws and enforcing those laws in order to protect its citizens. Another important duty of government is to provide for under privileged members of government.


Why do economists say there is no such thing as a free lunch?

It relates to the notion that government aid programs (like those that provide free food) are paid for by taxpayers.


One thing that the federal government pays for with your tax dollars is?

The federal government uses our tax dollars to pay all of its thousands of employees, including those in military service.