Money & Exchange Rate There Multiple Chapters

Open, View, and/or
Download this Document

Total Length: 671 words ( 2 double-spaced pages)

Total Sources: 4

Page 1 of 2

China fixes the rate of its yuan to the dollar on a pegged float, where the float is minimal. This policy results in Chinese exports being underpriced, making them attractive in world markets (Dunaway, 2010). Two impacts of this policy are a strong export sector and a weak import sector, as foreign goods are very expensive in China. While China's economy is growing rapidly, the currency policy also facilitates high rates of inflation (Batson & Back, 2010). This causes its own problems in the internal market, in particular given that country's high level of wealth disparity. In addition, this inflation will put pressure on the central government -- the peg to the dollar becomes more expensive to maintain, assuming that China increases interest rates in order to address the inflation.

Stuck Writing Your "Money & Exchange Rate There" Multiple Chapters?

View All Our Example Money & Exchange Rate There Multiple Chapters

Have A Custom Example Essay Written



Monetary and exchange rate policies are used to address issues such as the current account and inflation, but they also have an impact over the level of employment in a country, and the level of domestic consumption as well. Even business investment is impacted, because higher interest rates lead to higher required rates of return, discouraging investment and innovation. Nations need to find the right balance between these different outcomes in order to maintain employment, output and inflation at healthy, sustainable levels. Monetary and exchange rate policy, therefore, is central to finding this equilibrium point.

Works.....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Money & Exchange Rate There" (2010, May 16) Retrieved May 18, 2024, from
https://www.aceyourpaper.com/essays/money-exchange-rate-12629

Latest MLA Format (8th edition)

Copy Reference
"Money & Exchange Rate There" 16 May 2010. Web.18 May. 2024. <
https://www.aceyourpaper.com/essays/money-exchange-rate-12629>

Latest Chicago Format (16th edition)

Copy Reference
"Money & Exchange Rate There", 16 May 2010, Accessed.18 May. 2024,
https://www.aceyourpaper.com/essays/money-exchange-rate-12629
   

Open, View, and/or
Download this Document
order custom essay example