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Who guarantees the currency?
Central banks typically guarantee the currency of a country. They are responsible for issuing and regulating the money supply to ensure its stability and value.
Why does the supply curve in the foreign-currency exchange market become vertical in an open economy?
In an open economy, the supply curve in the foreign-currency exchange market becomes vertical because the central bank can adjust the supply of its currency to meet the demand, ensuring stability in the exchange rate.
Why does the national government need currency for its operations and functions?
The national government needs currency for its operations and functions because it is used to pay for goods and services, fund programs and initiatives, and manage the economy through monetary policy. Currency is essential for the government to carry out its duties and maintain the stability of the country's financial system.
What is the difference between softcurrency and hardcurrency?
It USED to be the comparison between paper money and metal money.Now it's just a reference to the assumed stability of two soft currencies. Note A hard currency is freely convertible into other currencies, but a soft currency is hedged about with restrictions on its conversion into other currencies. In some cases a soft currency may be a purely internal currency with no or almost no convertibility.
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.
