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What role does the central bank play if the fixed rate is set below market equilibrium?
Wiki User
∙ 8y ago
If the fixed rate is set below market equilibrium , the central bank plays an important roll as follows:
1) They will not return the money anyone invested
2) They can bully the government to give them money
3) They will stole another banks money for their need
4) They will encounter police
Wiki User
∙ 8y ago
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Advantages of a fixed rate of exchange?
A fixed exchange rate system is one where the value of the exchange rate is fixed to another currency. This means that the government have to intervene in the foreign exchange market to maintain the fixed rate. The equilibrium exchange rate may be either above or below the fixed rate. In Figure 1 below, the equilibrium is above the fixed rate. There is a shortage of the national currency at the fixed rate. This would normally force the equilibrium exchange rate upwards, but the rate is fixed and so cannot be allowed to move. To keep the exchange rate at the fixed rate the government will need to intervene. They will need to sell their own currency from their foreign exchange reserves and buy overseas currencies instead. This has the effect of shifting the supply curve to S2 and as a result, their foreign currency holdings will rise.
True or false A price fixed below the equilibrium price of a product will cause a shortage of that product?
true
Shift in demand?
Laws of demand and supply is based on the assumption that other things (given market, fixed set of customers whose income are not changed whose taste remains same and the price of substitutes or complementary goods also remains unchanged) will remain same and if there is any change in any such factors it will cause shift in demand and supply curve and there will be new equilibrium price and equilibrium quantity.
What factors may cause a change in the market and fair value of fixed rate notes and bonds?
One of the key factors that can change the market and fair value of fixed rate notes and bonds is an increase or decrease in market interest rates. Even though a bond has a fixed rate, it's value is dependent on current yields in the market and the value of the bond will move inversely to interest rate changes.
What are total cost of production examples?
In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market Total Market Cost =Variable Costs and fixed costs ...Fixed costs plus variable costs.
Advantages of a fixed rate of exchange?
A fixed exchange rate system is one where the value of the exchange rate is fixed to another currency. This means that the government have to intervene in the foreign exchange market to maintain the fixed rate. The equilibrium exchange rate may be either above or below the fixed rate. In Figure 1 below, the equilibrium is above the fixed rate. There is a shortage of the national currency at the fixed rate. This would normally force the equilibrium exchange rate upwards, but the rate is fixed and so cannot be allowed to move. To keep the exchange rate at the fixed rate the government will need to intervene. They will need to sell their own currency from their foreign exchange reserves and buy overseas currencies instead. This has the effect of shifting the supply curve to S2 and as a result, their foreign currency holdings will rise.
True or false A price fixed below the equilibrium price of a product will cause a shortage of that product?
true
What is the difference between government securities market and corporate debt securities market?
Government Securities Market : Consists of securities issued by the State government and the Central government. This include Central Government securities, Treasury bills and State Development Loans. Debt securities market : Is a market for the issuance, trading and settlement in fixed income securities of various types. Fixed income securities can be issued by a wide range of organizations including the Central and State Governments, public bodies, statutory corporations, banks and institutions and corporate bodies.
Who are the targeted customer for fixed deposit in India?
WHO ARE THE MAJOR TARGET MARKET FOR FIXED DEPOSITS WHO ARE THE MAJOR TARGET MARKET FOR FIXED DEPOSITS Identify the major target market of fixed deposit
What is the definition of electrostatic equilibrium?
Electrostatic equilibrium simply means that no net force is acting on the charged particle, and it doesn't accelerate, ie it's a charge fixed in space
Who fixed the price in the market?
As far as i know the price is being fixed by the government only
Which fixed annuities pay the best for investments?
Fixed annuties are guaranteed to drop below a preset or fixed return on your investment. They are usually tied to the stock market. For a review of different type of annuities check out www.bestfixedannuity.info/ Fixed annuities that have the highest rates are the ones that will pay the most.and that have no withdraw or surrender charges. All of these factors are to be considered when looking for the best returns paid.
What is a fixed interest?
Fixed interest means that the interest on a loan or deposit does not change as the result of market fluctuations.
Shift in demand?
Laws of demand and supply is based on the assumption that other things (given market, fixed set of customers whose income are not changed whose taste remains same and the price of substitutes or complementary goods also remains unchanged) will remain same and if there is any change in any such factors it will cause shift in demand and supply curve and there will be new equilibrium price and equilibrium quantity.
Which is the lowest fixed rate mortgage in the market?
The lowest fixed rate mortgage in the market is 2.99% in Canada, and if one goes for a five year fixed mortgage, it is only 2.75% in Canada. One can try to compare rate by going on the sites of various banks.
Is The book value of a fixed asset reported on the balance sheet represents its market value on that date?
It is false that the book value of a fixed asset reported on the balance sheet represents its market value on that date. Fixed assets are also known as tangible assets.
How do you calculate common fixed expense not traceable?
The company's sales manager believes that sales in the Central geographic market could be increased by 15% if monthly advertising were increased by $25,000. Calculate the incremental net operating income.
