MONETORY SYSTEM Learning objectives 1. Exchange rate related concepts 2. Types of Exchange Rate Systems 3. The concept of ideal currency or the impossible trinity. 4. Fixed rates vs. Floating rates 5. Brief History of International Monetary System 6. Monetary policy and Exchange Rates in Australia Exchange rate related concepts • Exchange rate = the price of one currency in terms of another. • Two Expressions of Exchange Rate direct: domestic currency/foreign currency indirect: foreign currency/domestic
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BOND MARKET DEVELOPMENT: MONETARY AND FINANCIAL SYSTEM STABILITY ISSUES 2008 Ananda Silva∗ ∗ Ananda Silva‚ Director of Bank Supervision Department‚ Central Bank of Sri Lanka. 1 CONTENTS I. Introduction II. Bond Markets and Macroeconomic Stability A. B. C. D. High and Volatile Inflation Continuing large Fiscal deficits and Rising Public Debt Continuing Current Account Deficits Leading to Depreciating Currency Other Impediments in market and Institutional Infrastructure III
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TERM PAPER : Monetary‚ Banking and Financial Markets 1) Financial markets have the basic function of A A) getting people with funds to lend together with people who want to borrow funds. B) assuring that the swings in the business cycle are less pronounced. C) assuring that governments need never resort to printing money. D) providing a risk-free repository of spending power. 2) Financial markets improve economic welfare because B A) they channel funds from investors to savers. B)
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Introduction and Background of the Study 1.1 Background of the Study: In almost all countries‚ monetary authority is governed by a central bank. In some countries‚ it is called federal reserve or reserve bank. Other countries like Andorra‚ Monaco and North Korea do not have a central bank due to various reasons. The central bank has always been responsible in managing the nation’s money supply or its monetary policy through managing interest rates‚ setting the reserve requirement‚ and acting as a lender
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between monetary targeting‚ inflation targeting and Taylor rule. In which case is money demand exogenous and in which case endogenous? Monetary targeting Monetary targeting is a strategy that uses monetary aggregates as an intermediate to achieve an ultimate goal such as price stability. In other words the amount of money in circulation is controlled by the central bank to achieve price stability or a stable inflation rates. From a neoclassical point of view‚ this is the best monetary strategy
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The Canadian Government and Macroeconomic Policies It’s good to look at monetary and fiscal policies in terms of macroeconomics now that the Liberal party has been in charge of the Canadian government for shortly over a year now and to see what changes Prime Minister Trudeau’s party has been able to accomplish in the beginning of his first term. I will briefly discuss topics such as inflation targeting‚ the reason for the low currency rate for the current value of the Canadian dollar‚ unemployment
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two ways: monetary policy and fiscal policy. Fiscal policy affects the economy by changing the volume of government spending or taxes. Monetary policy is the regulation of the money supply‚ weight of gross of aggregate demand‚ which in turn influences the interest rate. There are two types of monetary policy: monetary expansion and monetary contraction. In the first case‚ the money supply is increased‚ in the second case on the contrary decreased. This essay reflects the ways the monetary expansion
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Discuss the most effective policy approach during a time of recession‚ and where a country has a fiscal deficit (30 marks) A recession is when an economy experiences two consecutive quarters of negative economic growth measured by real GDP. A fiscal deficit is when government spending is greater than what is received through tax receipts. One policy to reduce the fiscal deficit and attempt to effectively deal with the recession would be to lower taxes such as VAT‚ this is an example of an expansionary
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Fiscal policy? Fiscal policy is the use of government spending and taxation to influence the economy. When the government decides on the goods and services it purchases‚ the transfer payments it distributes‚ or the taxes it collects‚ it is engaging in fiscal policy. The primary economic impact of any change in the government budget is experienced by particular groups—a tax cut for families with children‚ for example‚ raises their disposable income (Weil‚ n.d.). Discussions of fiscal policy‚ however
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Q1: Between the insistence on austerity versus deficit increasing growth policies in the Eurozone‚ which do you consider the most relevant and why? Europe is trapped in a vicious cycle of high unemployment‚ financial sector fragility‚ heightened sovereign risks‚ fiscal austerity and low growth. According to an annual UN report published on 17 January 2013‚ the austerity policies throughout the industrialized world will not keep the economy from slipping back into recession. The Eurozone debt
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