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A pegged exchange rate provides stability in international prices, fostering trade and investment by reducing exchange rate risk. It can also help to anchor inflation expectations in a country. However, the cost includes the potential for misalignment with market values, leading to trade imbalances. Additionally, maintaining the peg requires significant foreign exchange reserves and can limit a country's monetary policy flexibility.
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What is the difference between a floating and a pegged exchange rate?
pegged exchange rate is officially fixed in terms of gold or any other currency in foreign exchange. Floating exchange rate is flexible rate in which value of currency is allowed to adjust freely determined by the supply & demand of foreign exchange
What best explains what happens when a currency is pegged to the us dollar?
The value of the pegged currency goes up and down depending on the exchange rate of the U.S. dollar. ALSO Pegging a currency to the U.S. dollar gives that currency the same stability as the U.S. dollar, keeping its exchange rate from fluctuating too wildly.
What is a currency whose value is determined by the supply and demand for the currency in the market?
Pegged currency ^For me on apex 2022 :)
Explain why when exchange rates change some groups benefit and others lose?
When the exchange rates change some groups benefit like people who are exporting when the exchange rate drops. It is much worse if you're importing and the rate goes down.
Can central banks fix the rate of exchange?
Yes, central banks can fix the rate of exchange through a system known as a fixed or pegged exchange rate regime. In this system, the central bank commits to maintaining the currency's value at a specific rate relative to another currency or a basket of currencies. To maintain this fixed rate, the central bank may intervene in the foreign exchange market by buying or selling its currency. However, sustaining a fixed exchange rate can be challenging and may require substantial reserves and consistent economic policies.
What is the difference between a floating and a pegged exchange rate?
pegged exchange rate is officially fixed in terms of gold or any other currency in foreign exchange. Floating exchange rate is flexible rate in which value of currency is allowed to adjust freely determined by the supply & demand of foreign exchange
What best explains what happens when a currency is pegged to the us dollar?
The value of the pegged currency goes up and down depending on the exchange rate of the U.S. dollar. ALSO Pegging a currency to the U.S. dollar gives that currency the same stability as the U.S. dollar, keeping its exchange rate from fluctuating too wildly.
What happens when a currency is pegged to the U.S dollar?
The value of the pegged currency goes up and down depending on the exchange rate of the U.S. dollar. Pegging a currency to the U.S. dollar gives that currency the same stability as the U.S. dollar, keeping its exchange rate from fluctuating too wildly.
What is a currency whose value is determined by the supply and demand for the currency in the market?
Pegged currency ^For me on apex 2022 :)
What is the exchange rate of the Danish Krone?
Depends on what currency you want to exchange it to and the rate at that time. The Danish Krone is loosely pegged with the euro, but it fluctuates a bit. You can get an estimate by saying that 1 EUR is roughly 7.5 DKK.
What type of exchange rate is associated with a higher probability of experiencing a crisis?
While no type of exchange rate system guarantees safety, current research favors the idea that countries that adopt a Pegged Exchange Rate may be more vulnerable to an exchange rate crisis. (pg 273, Gerber) International economics James Gerber
What is the meaning of parity value in foreign exchange?
In a pegged/fixed exchange rate system the value of currency is fixed in terms of gold or the value of other currency.This value is the parity value of the currency
What has the author Andrea Bubula written?
Andrea Bubula has written: 'Are pegged and intermediate exchange rate regimes more crisis prone?' -- subject(s): Foreign exchange rates, Financial crises
Explain why when exchange rates change some groups benefit and others lose?
When the exchange rates change some groups benefit like people who are exporting when the exchange rate drops. It is much worse if you're importing and the rate goes down.
Can central banks fix the rate of exchange?
Yes, central banks can fix the rate of exchange through a system known as a fixed or pegged exchange rate regime. In this system, the central bank commits to maintaining the currency's value at a specific rate relative to another currency or a basket of currencies. To maintain this fixed rate, the central bank may intervene in the foreign exchange market by buying or selling its currency. However, sustaining a fixed exchange rate can be challenging and may require substantial reserves and consistent economic policies.
How much yen is one US dollar at 1969?
In 1969, the exchange rate was approximately 360 Japanese yen to one US dollar. This fixed rate was part of the Bretton Woods system, which pegged currencies to the US dollar. The rate remained stable until Japan moved to a floating exchange rate system in the early 1970s.
Internal rate of return is ratio in which a benefit cost equals 1 b benefit cost 1 c benefit cost 1 d none of these?
The internal rate of return (IRR) is the discount rate at which the net present value (NPV) of a project's cash flows equals zero. This means that the benefit-cost ratio is equal to 1, indicating that the project's benefits are equal to its costs. Therefore, the correct answer is a) benefit cost equals 1.
