Written Assignment Unit 2 BUS 1103
Among the concerns that were raised during a Congress hearing was the possibility that foreign governments would stop buying U.S. Treasury bonds, a practice used by governments to prevent their currencies from appreciating against the U.S. dollar. Use the model of supply and demand to describe the Treasury bond market and to predict the direction of quantity and price in this case.
One efficient way of financing the national debt of the United States is by trading
Treasury securities, issued by The United States Department of Treasury
Amongst four types of United States marketable securities, which are Treasury Bills,
Treasury Notes, Treasury Bonds and Treasury Inflation Protected Security, Treasury bonds type is very
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China has been buying U. S. securities for a very long time, being a very big manufacturing and export-oriented country in the world. According to Wikipedia (2016),
China`s total securities in June 30, 2014 were US 1,268.7 billion.
Written Assignment Unit 2 BUS 1103
When selling the manufactured goods to the US, China receives US dollars but to pay the employees inside the country it needs Renminbi (RMB or Yuan). The US dollar supply increases when it is sold by the exporters and the RMB demand rises. To keep a control of the supply and demand in the country, the Bank of China buys the dollars and give the needed RMB to the exporters. In doing so, the price of dollar increases and the
RMB remain cheap. In order to manufacture goods at a low price for keeping the export market high, China needs the RMB to stay at a low price, so the government interfere in keeping this balance. In other countries the import-export balance has a self-correction mechanism. If the supply of one currency increases and the value will be depreciated, then the country will start exporting more and importing less in order to bring the currency at a higher value
The anti-social behaviour act was made in 2003. The reason for why this was made was to make the rules of anti-social behaviour better and work more efficient also to do the same with the fixed penalty notices. The rules of this act is no one that is under the age of 16 is allowed to buy spray paint due to graffiti on private properties, no group of teenagers are allowed to do anything wrong to the public and also no public drunkenness which can lead to people disturbing the peace. An example for this could be the ASBO’s.
Trade is essential to overcome the dollar gap that prevented foreign marketing of United States goods (Melanson and Mayers, 159). There are many economic issues which face the nation at this time. A recovery from World War II and the Korean War, a recession, a change in the political party of the president, and several other issues. Thus, this must be a time of strong economic leadership. The policies made and legislature passed must steer the United States through this apparent storm and give the nation a chance to rest from the hecticness of the first half of the century.
The central bank of Mexico has built up at high level of international reserve. The huge reserve was the result of the Mexican government?s policy of exchange intervention to prevent large fluctuation in the peso. In the beginning of 1994, the reserve amounted to US$26.4 billion but was depleted to a low US$6.7 billion in Mid Dec, flagging red light that the exchange mechanism had been pushed to the limit and the government can no longer hold on to the pegged peso to US dollar.
Allowing market participants to begin putting their resources back to work in areas they’d be most beneficial. President Obama’s fiscal responsibility summit last February indicated that he understood the urgent need for fiscal discipline. Congress’s enactment of the American Recovery and Reinvestment Act and President’s proposed budget makes the goals of a sustainable budget and addressing nations longer term fiscal priorities, such as entitlement liabilities, even more elusive. The administrations recently released midsession reviews from the office of management and budget that over the next 10 years the accumulated deficits will total $9 trillion which means that the debt held by public will be a staggering 77% of GDP in 2019. If the debt level continues to grow faster than our economy, the US will owe more than it makes.
The US has been in and out of debt countless times throughout history, going as far back as the Civil War. However, debt did not become a truly relevant problem until much later, in the 1980s (Budget Deficits). Up to that point, large budget deficits were generally only allowed during wartime, but this pattern ended after the Great Depression. Roosevelt’s New Deal meant that the government spent much more than it previously did, even after the economy improved (Budget De...
All but four countries in the world has external debt (“Country Comparison: Debt External”). Having a debt is almost as common as having a mortgage. Since its establishment, The United States has always been in debt (“Historical Debt Outstanding – Annual”). The US national debt has had five sharp increases previously in its history. The reasons include civil car and the two World W...
Despite the fact that recent reports have shown that the Chinese currency is currently facing descending pressures, it is, however, likely to improve in the future because of the enhanced terms of trade, current account surplus that is growing, and high net saving. Another reason that will make the Chinese RMB to do well in the future it is because the currency has solid fundamentals and the economy of the country is significantly increasing at a higher rate than the GDP rates. Due to the growing Chinese economy to being the second largest economy, the Chinese currency yuan has been acknowledged by the International Monetary Fund (IMF) as a major global
While China has been successful in the last few decades and has essentially made itself an economic super power using whatever means necessary, it is time for them to take a look at the rest of their future. China cannot sustain their growth using the same old methods. They must now look to address the needs of their people by introducing a more democratic society, a market that acts freely via supply and demand and actions that show responsibility for the entire world. The United States has a strong role to play in China’s future and it must do so to protect its own agendas and its status as a super power.
Xingzhong, LI Daokui David YIN. "The International Monetary System in the Era of Post-Financial Crisis: What Policy Options Does China Have?[J]." Journal of Financial Research 2 (2010): 005
From the 1970s, there has been a wave of liberalization in China, which was introduced by Deng Xiaoping. This is one of the key reasons to the rise of China to be one of the economic giants in the world. In the last 25 years of the century, the Chinese economy has had massive economic growth, which has been 9.5 percent on a yearly basis. This has been of great significance of the country since it quadrupled the gross domestic product (GDP) of the country thus leading to saving of 400 million of their citizens from the threats of poverty. In the late 1970s, China was ranked twentieth in terms of trade volumes in the whole world as well as being predicted to be the world’s top nation concerning trading activities (Kaplan, 53). This further predicted the country to record the highest GDP growth in the whole world.
In November of 2004, the United States ran a fifty-four billion dollar trade deficit, translating to over 600 billion for the entire year. This deficit is a result of the disparity between the amount of goods that the US imports and the amount it exports. To equalize this deficit in its current account, the American government sells assets from its capital account, often to foreign investors. This phenomenon is seen as a serious threat to the success and continued growth of the nation’s economy, tied in with popular concerns that the United States is losing its competitive and dominant edge in global economics. The traditional economic theory employed to solve this problem calls for a return to mercantile protectionism, through use of tariffs and subsidies to drive up the price of imports and lower the price of exports. Running contrary to this is a second option: increasing domestic savings and lowering government spending. These theories both aim to decrease American dependence upon foreign imports and investment, and ultimately equalize the enormous trade deficit that currently exists.
Thailand implements a controlled floating exchange rate system, pricing to market forces on the Thai baht, and the Thai central bank would only intervene in the market when necessary, in order to avoid excessive exchange rate volatility to the expected impact of economic policies. At present, the global economic slowdown, domestic demand is not good in Thailand. In order to keep the country's export competitiveness, the Bank of Thailand is more inclined to let the baht weaken.
In the short run, other things being equal, an increase in demand will raise the price and this, in turn, will cause an extension in supply.
In United States the economy has changed over the years the government wants their people to be more competitive and more marketable compared to other country such china. Many people have come to the conclusion that China may be a threat in the near future because of their growing economy and increasing influence in the world.
China has also expanded their trading industries with countries such as South Korea, Japan, Taiwan, ASEAN, India, Russia and Hong Kong. This has not satisfied the Chinese greed for income as they also export and import goods to American countries, name...