Foreign exchange reserves

1. Please explain inelasticity and elasticity of demand. What happens when there is a tax on luxury items? In economics, elasticity is the measure of responsiveness towards the demand for a product when its price is changed. The basic formula for calculating the elasticity of a product is to divide the percentage change in quantity demanded by the percentage change in price. When the value of elasticity is greater than one percent, it indicates that the demand for the good is sensitive to…

economic units are based on a fixed quantity of gold. It was first used by the United Kingdom in 1717. The system offered price stability, a fixed exchange rate and free movement of gold. Other countries slowly began to see the advantages of the system, and by the end of the 1870’s, most industrial countries had followed the United Kingdom’s gold-backed exchange rate. 1873 marked the beginning of the ‘Long Depression’; this was caused a recession of world prices, and lasted up until 1896, at…

Contents International Trade 2 UK Balance of Payments 2 UK Trends in Trade over the last 30 years 2 The 80’s 3 The 90’s 3 Currently 3 Relationship between the Exchange Rate and Balance of Payments 3 The Advantages and Disadvantages and Effects of Two Exchange Rate Regimes 3 Floating Exchange Rates 3 Fixed Exchange Rate 4 Effects of Exchange Rates on Economic Agents 4 Impact of Multinationals on Less Developed Economies 4 References 5 International Trade A free trade agreement is a group of…

information technology in a verity of applications, and they are computerized to different degrees. Prior to Freund and Pagano (2000), there has been little done in terms of studying the impact of using information technology on the efficiency of exchange markets. Also, there were not enough empirical studies to show whether the behaviors of share prices in the post implementation of automated trade platforms support the assumptions of the Efficient Market Hypothesis. In this regard, Freund and…

Pricing Comparing Japan’s purchasing power with the United States, Sherwin Williams will use the Big Mac Index. As of July 2017, the price of purchasing one Big Mac in Japan is 380.00 JPY or in US dollars, 3.36 USD. The average price for one Big Mac is 5.30 USD in the US. The price of Emerald paints can range from 80 USD to 90 USD in the US. Thus, the retail price of such brand of paint will be priced at 50.71 USD to 57.05 USD in Japan. In Japanese yen, the price will be converted as 5685.15…

Whether we like to admit or not, there are two sides to every coin. A head and a tail, a good and a bad. The same can be said for societies. For every utopia, there’s a dystopia lurking underneath that perfection. This is especially true in the society, Oceania, in George Orwell’s book, “1984.” In an attempt to to acquire perfect peace, equality, and compliance throughout their society, they government went through a huge “reform” into a communist society with very little of the freedoms we call…

under the key assumption that both prices and wages are sticky . The vertical axis in both diagrams measures each respective country’s real exchange rate in relation to the rest of countries in the world : 〖EP〗^1/P^* and 〖EP〗^2/P^*. E is the common currency’s exchange rate, which is initially E_0. Point W shows the initial situation where the real exchange rate in both countries is the same, λ_0, and λ_0=E_0 P^1/P^*=E_0 P^2/P^*. For the purpose of analysis, it is assumed that country 1…

as covered and uncovered interest rate parity. In covered interest rate parity, the forward exchange rates should incorporate the different in interest rates between the two countries. There is no interest rate advantage regardless of the interest rate. On the other hand, uncovered interest rate parity states that the difference in the two countries interest rates equal that of the expected change in exchange rates for those same two…

amount of imports and exports went down and interest rates rose. US companies operating in other countries found they could not borrow as much money due to the costs associated with the loan. This led to the dollar not being worth as much on the exchange, which led to the stock…

be used to facilitate exchange. In this example, Marx demonstrates how, when we use money as a medium of exchange, objects we once used as commodities have metamorphosed into objects with a different use, that of a medium of exchange. Marx goes on to explain that this change occurs after commodities enter the process of exchange as they are; they are then differentiated into commodities and money. He points out that gold, as an example, once entered in the process of exchange, is perceived by…