Describe two different currency systems that have been introduced in countries such as Hong Kong and Ecuador to improve the credibility of pegged exchange rate systems
What will be an ideal response?
Hong Kong has a currency board system. A currency board is a monetary institution that issues base money (notes and coins, and required reserves of financial institutions) that is fully backed by a foreign reserve currency and fully convertible into the reserve currency at a fixed rate and on demand. Hence, the domestic currency monetary base is 100% backed by assets payable in the reserve currency. In practical terms, this requirement bars the currency board from extending credit to either the government or the banking sector. Ecuador instead has officially adopted the U.S. dollar as its currency. This is an example of ("Official") dollarization, which occurs when a foreign currency has exclusive or predominant status as full legal tender in a particular country.
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One frequently voiced concern about globalization is that it destroys manufacturing jobs in wealthy advanced economies such as Canada. The basic thrust of the critics' argument is:
A) developing nations will recruit employees from the more advanced economies, thereby depleting their labour pools B) globalization increases the pace of the shift from a world economy based on manufactured goods to a world economy based on services C) falling trade barriers allows firms to move their manufacturing activities offshore to countries where wage rates are much lower D) the governments of developing countries will heavily subsidize their primary industries, making competing products produced in advanced economies less attractive E) Canadian workers are overpaid and the true value of a manufacturing job is much lower
During which phase of the corporate life cycle are investing cash flows positive and financing cash flows negative?
A. Introductory B. Growth C. Maturity D. Decline