TUGAS 1

Answer ! :

1. The primary goal of central banks is to provide their countries' currencies with price
stability by controlling inflation. What will happen if a country does not have Central
bank?
Central Bank

The central bank has been described as the "lender of last resort," which

means it is responsible for providing its nation's economy with funds
when commercial banks cannot cover a supply shortage. In other words, the central
bank prevents the country's banking system from failing.

However, the primary goal of central banks is to provide their countries' currencies
with price stability by controlling inflation. A central bank also acts as the regulatory
authority of a country's monetary policy and is the sole provider and printer of notes
and coins in circulation.

Central banks carry out a nation's monetary policy and control its money supply,
often mandated with maintaining low inflation and steady GDP growth.
On a macro basis, central banks influence interest rates and participate in open
market operations to control the cost of borrowing and lending throughout an
economy.
Central banks also operate on a micro-scale, setting the commercial banks' reserve
ratio and acting as lender of last resort when necessary.

What will happen if a country does not have Central bank?

If a country does not have a central bank, then the country will find it difficult to
maintain currency stability, banking sector stability, and the financial system as a
whole. There will be inflation in the country, also the amount of money in circulation
will be too much.

Do you agree that a floating exchange rate adds uncertainty to international trade?
Explain your reason!
I Agree, Because the main economic advantages of floating exchange rates are that
they leave the monetary and fiscal authorities free to pursue internal goals—such as
full employment, stable growth, and price stability—and exchange rate adjustment
often works as an automatic stabilizer to promote those goals. The main economic
advantage of fixed exchange rates is that they promote international trade and
investment, which can be an important source of growth in the long run, particularly
for developing countries. The merits of floating compared to fixed exchange rates for
any given country depends on how interdependent that country is with its
neighbors. If a country’s economy is highly reliant on its neighbors for trade and
 investment and experiences economic shocks similar to its neighbors’, there is little
benefit to monetary and fiscal independence, and the country is better off with a
fixed exchange rate. If a country experiences unique economic shocks and is
economically independent of its neighbors, a floating exchange rate can be a
valuable way to promote macroeconomic stability.

Sumber Referensi : BMP ADBI4201 Bahasa Inggris Niaga