Question

In a fixed exchange rate system, how do countries address the problem of currency market pressures that threaten to lower or raise the value of their currency?

Answer 1

Answer:

If demand falls, then countries must increase demand by buying excess supply with national currency ; If demand increases, countries must meet the excess demand for foreign exchange by selling their reserves.

Explanation:

The first analyzes we know about demand are those related to price fluctuations and the quantity of products or services in a given market, leading to changes in demand depending on the type of market competition, which leads us to consider the potential market, consumption level and distribution of family spending. This is where the opinion of the Marketing analyst becomes important, which should ask the following questions: How many people can buy our product? If the researcher tries to obtain a skateboard market potential, it is essential to investigate the number of births in the given period.

Just as the money supply is constituted by the total amount of money that exists in an economy, which is closely related to liquidity, as a consumer buying instrument. The so-called Total Monetary Demand arises, “the function that expresses the amount of wealth that people and companies keep in the form of money” and that at the time of consuming it is transformed into units of units of a good or service that consumers want Acquire at a specific time.