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Maintaining a strong dollar in the international currency market is one of the primary goals of Canada’s Central Bank.
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- Which one is correct? UK currency is a commercial bank liability UK currency is a central bank asset UK currency is a Bank of England liabilityDeposits of Australian dollars held at authorised deposit-taking institutions are government money horizontal money part of the monetary base?To ensure that paper money will be accepted, the U.S. government implicitly promises the public that Group of answer choices it will not change currency denominations so that the paper currencies U.S. citizens have will continue to be used for exchanges. the U.S. monetary system will always be backed by a precious metal. it will not print money so fast that it loses its value. it will not change the rate at which the dollar is exchanged for other currencies.
- The U.S. economy is faltering, so the value of its associated currency, the dollar, is likely toConsider two countries: Japan and South Korea. In 1996 Japan experienced relatively slow output growth (1%), while South Korea had relatively robust output growth (5%). Suppose the Bank of Japan allowed the money supply to grow by 1% each year, while the Bank of Korea chose to maintain relatively high money growth of 15% per year. Treat South Korea as the home country and Japan as the foreign country, and use the simple monetary model (with constant L) to answer the following questions: a. What is the inflation rate in South Korea ()? How about Japan ()? b. What is the expected rate of depreciation in the Korean won relative to the Japanese yen? c. Suppose the Bank of Korea decreases the money growth rate from 15% to 10%. What is the new inflation rate in South Korea? d. Using time series diagrams (impulse graphs), illustrate how this decrease in the money growth rate affects South Korea’s nominal money supply MK; prices PK, real money…Cheque account balances are not included in the money supply because it is not something the Reserve Bank controls. Select one: True False One of the functions of the Reserve Bank is to control the exchange rate. Select one: True False
- How do central bank digital currencies (CBDCs) influence traditional monetary policy tools, and what implications might their widespread adoption have on international financial stability and cross- border payments?The U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…The U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…
- Outlining a revision to the Bank's monetary policy framework to explicitly incorporate exchange rate stabilization as a policy objective.Assume that the quantity theory of money and relative PPP both hold. Output growth is 3% in the U.S. and 2% in Mexico, while money supply growth is 7% in the U.S. Money demand is constant in both countries. What money supply growth rate should Mexico choose if it wishes to fix the value of its currency to the U.S. dollar?Outlining a revision to the Bank of Canada’s monetary policy framework to explicitly incorporate exchange rate stabilization as a policy objective.