[FIXED > FLOAT] Who in the US would benefit from a fixed exchange rate? Historically, this is outlined in the domestic societal framework (a rationalist point of view dictating political outcomes as a direct result of domestic material interests in society). Whatever society wants, society gets, leaving the consumer is to benefit from a fixed exchange rate. Competition exists between all interests. Whatever interest dominates takes the winning interest. The winning interest, then, determines the outcome. With businesses facing pressure to decrease domestic prices, consumers now have the upper hand. (Wellhausen, 10-2-14). Thus, due to the enhancing credibility of the government, consumers also are to benefit from a fixed exchange rate. (Multiple governments …show more content…
Supported by the domestic intuitional framework, which details that political outcomes are results of a variation in the “rules of the game,” producers are the ones to benefit from a floating exchange rate. Interests are translated into policy via domestic institutions. For example, Congress and farm subsidies. Individuals are interested in their own well-being. Winners gain by lobbying because they prove better than their opponent. In this framework, politicians decide based on majority principles and an increased demand for a country’s products. With more money flow, businesses have incentives to increase domestic prices (Wellhausen 10-2-14). Being so, exchange rate policy is homily political in that it is chosen by a differentiation in the “rules of the game.” Again, everyone sets out to seek their own best interests. Within this same framework, politicians find themselves in a catch-22: although they choose that which is to come, in doing so, they face vast amounts of pressures. Special interest groups and mass public opinions alone carry enough weight to affect any course profoundly and profusely (Frieden, p.
The law of one price is ease to test in the same country, this is done through comparing the prices of goods; example, is the price of a meal the same in different cities within the same country (Port of Spain, Chaguanas, San Fernando) or within Trinidad’s sister island Tobago? The theory indicates that prices ought to be homogenous throughout. Conversely, the comparison of prices between different countries where different currencies are used tends to be a lot more difficult; however, this can still be done by looking at international currency markets where traders exchange currencies at some rate of exchange depending on the demand and supply of each c...
Grauwe, Paul De. "The Political Economy of the Euro." The Annual Review of Political Science (2013): 153-170. Academic Search Complete.
Individual report Introduction Bitcoin is a great invention of modern world which has created a huge impact on the lives of people. Bitcoin has converted the entire world into a global village in a very short span of time which in itself is a great deal. Bitcoin – the money gets transferred directly without going through a bank or other clearing house. Bitcoins are like a stock in that a Bitcoin has a price per coin. Apart from this, we can search for almost everything and also stay up to date with the current happenings.
The book two dollars a day by Kathryn Edin is a book that highlights a spiraling poverty in America. One thing I feel contributed to the poverty talked about in the book is some types of American political culture. People in America who are in need of welfare often won’t take it until they have become so impoverished there is no other option due to the stigmas that come with welfare. American political culture also creates a persona for poor people it often paints them as lazy minorities that don’t want to work though they would be capable if they tried too. The pull yourself up by the boot straps mantra only creates more detestation for the poor and impoverished that already don’t seem to fit into the American dream.
Federal Reserve interest rates are very important and can have an impact on a person’s life in multiple ways. The Federal Reserve interest rate is widely defined as the interest rate that banks charge each other to lend Federal Reserve funds overnight and is what the central banks are required to have on hand. The Federal Reserve interest rate ensures that banks are not lending out every single dollar they have and maintain some in reserve. (Amadeo, 2016) For this reason the Federal Reserve interest rate plays a vital role in the strength of an economy.
The world is becoming increasingly more accessible due to the internet; specifically for monetary transactions such as shopping and banking. In 2009, a group of people under the name “Satoshi Nakamoto” created the Bitcoin, a form of digital currency that can be used to conduct transactions on the internet. In the past six months, there has been a sudden spur of popularity for the Bitcoin, which increased the coin’s net worth, as well as stock prices for investors. Its stocks started accumulating investors in September 2013, at roughly $130 a share. Now in 2014, a share of the Bitcoin, sits at approximately $600. On a purely economic level, the Bitcoin may appear to be a promising investment of both money and hope for the economy in the future as technological advancements make improvements in our day-to-day lives. However, the very thing that is attracting investors is also sending red flares to government officials – uncertainty. A virtual currency is innovative and a very new concept to the society which we have today that is caught in a limbo between holding onto the old and transitioning into the new. The Bitcoin generates an interesting outlook on global politics and economy in the 21st Century. The virtual currency analyzes the threat of a foreign currency within a state, the possibility of a potential global currency and the technological economy of the future.
As the value of a dollar is usually understood as a means of correcting a shortage in the balance of expenses and can be very confusing, when it comes to money. “A strong dollar has always been a good thing for the United States,” Treasury Secretary Jacob J. Lew declared not long ago, a position that he has restated frequently (Jeff Sommer). The view is that it is weakening the value of a dollar and could actually be good for the economy. But, as a weaker currency might boost it, then in turn make a stronger employment growth and will set up in motion and keep the economy going. If the dollar is strong compared to other foreign currency and weak currency means that the dollar is weaker than the conditions of strong and weak have relative meanings
Time Traders is a series of novels by Andre Norton, real name Alice Mary Norton, an American fantasy and science fiction novelist. The first novel in the series was the 1958 published The Time Traders that paved the way for a very popular series that culminated in Atlantis Endgame the seventh novel of the series published in 2002. Andre Norton the author always has a love for the humanities since she was in high school. Getting much needed inspiration from a charismatic teacher she started penning novels when she was still a teenager. Given the time she was born in and the genre she had chosen, the publishers advised her to go with her pseudonym as Alice Norton simply would not sell.
...or more competitive in those markets. For example; for most of the 1990s, the U.S. dollar appreciated against most of the other world currencies. As the dollar increased in value, U.S. companies doing business in other parts of the world saw their profits, earned in other currencies, decrease when converted to dollars (Folsom & Boulware, 2009, p. 172). This problem is more famous in the third world countries that had weak to medium economic situation and suffered from improve or decline in the value of their local currencies against the US dollar in some particular periods. The company here are required to do some special arrangements to deal with that condition every time is happen. For instance; they can reduce their prices or make some discounts when this situation take place to remain compete in the markets against other local or even international organizations.
Fixed exchange rate which is at times known as pegged exchange rate is an exchange rate regime where a country’s currency value is fixed against the value of another currency or to another measure of value such as gold.
To put it simply, the exchange rate is a price. As with any other market, price is determined by supply and demand. Whenever they are not equivalent, the exchange rate would change. However, the reality comes to be far more complicated.
This book highlights certain economic/financial methods used by various governments in an attempt to boost their own economy and place them at the top of the proverbial food chain. Unfortunately, competitive devaluation is a main weapon in the arsenal of financial tactics to achieve that very goal. Rickards tells us how badly major currency wars in the past have always ended – we should not engage in them.
To what extent will crypto-currencies affect the worlds economy? Introduction Firstly, an insight into crypto-currencies, what they are and how they can benefit the worlds economy. A crypto-currency is ‘digital medium of exchange’(RhettandLink) - managed through extensive encryption techniques known as cryptography. Comparable with fiat money, no group or individual can stunt, increase or abuse the production of crypto-currencies.
The foreign exchange markets allow the conversion of currencies, where it helps the firms to conduct trade more efficiently across the national boundaries. In addition, firms can shop for low cost financing in capital markets all over the world and then use the foreign exchange market to convert the foreign currency that they got into whatever currency they require. With the foreign exchange nowadays, anyone can go to other country by converting their domestic currency into the foreign currency. The foreign exchange will follow the rate of exchange according to the country's rate. But still, the foreign exchange market is actually dealing with fluctuation where sometimes it has upward and downward movement.
The foreign exchange market is fundamentally a market in which various national currencies are bought and sold. There are as many currencies as many foreign nations. In any international transaction, it involves conversion of one currency into another. Foreign exchange markets is the mechanism for the arrangement of converting one currency into another. When we buy commodities from foreign countries, we have to convert our currency into foreign currency to make payment. Here we are going to have a glimpse at various aspects of foreign exchange markets.