Currency Board
Global Economic Environment of the Firm
Macro Economics
Monetary Policy and Exchange Rate Regimes
The questions should be answered using Macro Economic arguments using graduate level thinking. Please pay attention to the questions asked. More detail, the better.
Questions: The article argues that, ``the rigidity of the currency board made it difficult to respond to these shocks." You should think of the currency board simply as a fixed exchange rate regime.
(i) What are the restrictions that the currency board imposes on economic policy, which makes it difficult to respond to external shocks?
(ii) If Argentina was not on a currency board what could it have done to respond to the external shocks of rising cost of capital, and the fact that Brazil, Argentina's main trading partner had devalued its currency?
https://brainmass.com/economics/contracts/currency-board-4525
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(i) What are the restrictions that the currency board imposes on economic policy, which makes it difficult to respond to external shocks?
A currency board is a fixed exchange rate regime. By fixing the exchange rate the Central bank gives up its ability to influence the economy through monetary policy.
Suppose the central bank wants to increase the output and give a boost to the economy in the short run by lowering the interest rate. Thus it increases the money supply through a purchase of domestic assets. Under a floating exchange regime this would cause a depreciation of the domestic currency. However in a fixed exchange regime the central bank would not ...
Solution Summary
The solutions answers 2 questions on currency board and external shocks.
Environmental Science
Scenario:
You are a demographer, a person who studies population patterns. Like most demographers, you are well aware of the growth of the human population in the last century. In 1900, the earth had a population of about one and a half billion people. By 2000, earth's population had quadrupled to six billion people. Most of these people live in the developing world.
One of your responsibilities is to help educate the public about the consequences of over-population. People don't understand much about demographics, so part of your job is to put your findings into language that lay people can understand. Sometimes you are asked to give speeches to business and environmental organizations. For example, next week you are scheduled to deliver an address on sustainable development to the annual meeting of Citizens for a Greener Planet. Shortly after that, you are participating in a panel discussion at Westmont College on the causes of famine.
You have academic responsibilities as well. For example, in a few weeks, you will be presenting a paper to the World Population Council on why fertility rates remain high in developing nations. It will be a difficult issue to present, since part of your presentation will have to deal with why some developing countries have been slow to adopt contraceptive practices that are commonly used in developed nations.
In 1922, the futurist H.G. Wells predicted that human survival would depend on "the race between education and catastrophe." Wells was speaking about mankind's ability to pervert science in ways that might cause the destruction of the planet. He might have just as well been speaking about the potential of mankind to over-exploit the Earth to the point where too many people will be left competing for too few resources. It is an important part of your job to alert the public to the consequences of the population explosion, of which climate change, air and water pollution, the destruction of forests and wilderness areas, and the loss of biodiversity are the most frequently mentioned. You know that these consequences can be averted if humankind has the wisdom to maintain the balance between its needs and the resources that are available to sustain them.
Details: You decided to post the following provocative statement on your website this week for discussion, "In a market economy, food flows in the direction on economic demand. Need is not taken into consideration. To illustrate, in the event that there are hungry cats and hungry children, the food will go to the cats if the owners of the cats have money and the children's parents don't" (Wright, 2004).
Instructor Comments: All assignments must include at least two creditable sources listed on the reference page in accordance with APA guidelines. You must include in-text citations in the body of the paper for each source listed on the reference page. Please include an introduction paragraph that transitions to the main body of your paper and a strong conclusion paragraph that wraps up your argument or thesis with all assignments. This is in addition to the minimum Deliverable Length of all assignments. If you have any questions, please feel free to contact me and I will be glad to assist.
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