Assignment On Moneytary Policy

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\ltrch \dbch \af2 \hich \af0 \loch \f0 Monetary policy}{\b1 \fs40 \kerning2 \
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ltrch \dbch \af2 \hich \af0 \loch \f0 Monetary policy refers to the actions taken
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dbch \af2 \hich \af0 \loch \f0 , to control the money supply and interest rates in
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currency, and promoting economic growth. Central banks use tools such as setting
interest rates and buying or selling government securities to influence the money
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Foreign exchange reserves}{\b1 \fs28 \kerning2 \rtlch \ltrch \dbch \af2 \hich \
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Foreign exchange reserves are a country's reserves of foreign currencies held by
its central bank. These reserves can be used to stabilize its own currency,
maintain confidence in its economy, and support the value of its currency in the
foreign exchange market. They can also be used to fund international trade and to
provide a cushion in the event of an economic downturn. The most common foreign
exchange reserves are US dollars, Euro, the Japanese yen and the British pound.}{\
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kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 China, which has the largest
foreign exchange reserves in the world, with over $3 trillion as of 2021.}{\fs21 \
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{\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 Foreign exchange
reserves to provide a cushion in the event of an economic downturn}{\fs21 \kerning2
\rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 by these way:}
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dbch \af2 \hich \af0 \loch \af0 {\b1 \fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich
\af0 \loch \f0 Currency stabilization:}{\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \
hich \af0 \loch \f0 If a country's economy starts to slow down, investors may
become less confident in its currency, causing it to lose value. The central bank
can use its foreign exchange reserves to buy its own currency, thereby stabilizing
its value and maintaining confidence in the economy.}{\fs21 \kerning2 \rtlch \ltrch
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dbch \af2 \hich \af0 \loch \f0 Import coverage:}{\fs21 \kerning2 \rtlch \ltrch \
dbch \af2 \hich \af0 \loch \f0 During an economic downturn, a country may need to
import more goods and services to meet the needs of its citizens. Foreign exchange
reserves can be used to pay for these imports, even if the country's own currency
is losing value.}{\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \
af0 \loch \af0 {\b1 \fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0
Debt repayment:}{\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0
Many countries borrow money from international lenders. In the event of an economic
downturn, a country's ability to repay its debt may be affected. Foreign exchange
reserves can be used to make debt payments, even if the country's own currency is
losing value.}{\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \
lang1033 \langnp1033 Treasury Bill}{\b1 \fs28 \kerning2 \rtlch \ltrch \dbch \af2 \
hich \af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \
ltrch \dbch \af2 \hich \af0 \loch \f0 A Treasury bill (T-bill) is a short-term debt
security issued by the government. T-bills are sold in denominations of $1000,
$5000, $10,000 and $100,000, and have maturities of 4, 13, 26 and 52 weeks. T-bills
are sold at a discount to their face value, and at maturity, the investor receives
the face value of the bill. For example, if an investor buys a $1000 T-bill for
$950, at maturity, the investor will receive $1000. The difference between the
purchase price and the face value represents the return to the investor.}{\fs21 \
kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \par }\pard \plain \ql \
rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 T-bills are considered to be among the
safest investments, as they are issued by the government and are backed by its full
faith and credit. T-bills are also considered to be a liquid investment, as they
can be easily bought and sold in the secondary market.}{\fs21 \kerning2 \rtlch \
ltrch \dbch \af2 \hich \af0 \loch \f0 T-bills are often used by investors as a way
to preserve capital and earn a stable return, and by banks as a low-risk investment
option.}{\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \par }\
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fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 Additionally, T-bills
are considered as a tool of monetary policy, as central banks often use T-bills to
influence the money supply and interest rates. Central banks can buy T-bills to
increase the money supply and lower interest rates, or sell T-bills to decrease the
money supply and raise interest rates.}{\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \
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dbch \af2 \hich \af0 \loch \af0 {\fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \
lang1033 \langnp1033 Letter of Credit}{\b1 \fs32 \kerning2 \rtlch \ltrch \dbch \af2
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kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 A
letter of credit (LC) is a financial instrument that a bank issues on behalf of a
buyer, typically to guarantee payment to a seller for goods or services. It is
essentially a promise from a bank to pay the seller if the buyer is unable to
fulfill their financial obligations.}{\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \
af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \
lisb0 \lisa0 \widctlpar \aspalpha \aspnum \adjustright
\lin0 \rin0 \itap0 \fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \af0
{\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \
hich \af0 \loch \af0 {\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch
\f0 \lang1033 \langnp1033 The process of using a letter of credit typically works
as follows:}{\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \
lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0 \widctlpar \
\af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0
\widctlpar \aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \fs21 \kerning2 \rtlch
\ltrch \dbch \af2 \hich \af0 \loch \af0 {\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \
af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 1\}The buyer and seller agree on the
terms of the sale, including the price, delivery date, and any other conditions.}{\
b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \
\f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0 \widctlpar
\aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \fs21 \kerning2 \rtlch \ltrch \
\af0 \loch \f0 \lang1033 \langnp1033 2\}The buyer requests that their bank issue a
letter of credit in favor of the seller. This typically involves the buyer
providing the bank with information about the transaction, as well as any required
documentation, such as a purchase order or contract.}{\b0 \fs24 \kerning2 \rtlch \
ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \plain \
ql \li0 \ri0 \lisb0 \lisa0 \pnrnot0 \widctlpar \aspalpha \aspnum \adjustright \lin0
\rin0 \itap0 \ls0 \fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \af0 {\
langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0 \pnrnot0 \widctlpar \
aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \ls0 \fs21 \kerning2 \rtlch \ltrch
\dbch \af2 \hich \af0 \loch \af0 {\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \
hich \af0 \loch \f0 \lang1033 \langnp1033 3\}The issuing bank, upon reviewing and
approving the request, sends the letter of credit to the seller's bank, called the
advising bank or confirming bank, or directly to the seller.}{\b0 \fs24 \kerning2 \
rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \
plain \ql \li0 \ri0 \lisb0 \lisa0 \pnrnot0 \widctlpar \aspalpha \aspnum \
adjustright \lin0 \rin0 \itap0 \ls0 \fs21 \kerning2 \rtlch \ltrch \dbch \af2 \
\f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0 \pnrnot0 \
widctlpar \aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \ls0 \fs21 \kerning2 \
dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 4\}The seller, upon receipt of
the letter of credit, ships the goods or provides the services to the buyer.}{\b0 \
fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \
langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0 \pnrnot0 \widctlpar \
aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \ls0 \fs21 \kerning2 \rtlch \ltrch
\dbch \af2 \hich \af0 \loch \af0 {\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \
hich \af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \
lisa0 \pnrnot0 \widctlpar \aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \ls0 \
fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \af0 {\b0 \fs24 \
kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 5\}The
seller presents the required shipping documents, such as a bill of lading or
invoice, to the advising bank as a proof that the goods have been shipped or
service has been provided.}{\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0
\loch \f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0 \
pnrnot0 \widctlpar \aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \ls0 \fs21 \
\ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \plain \ql
\li0 \ri0 \lisb0 \lisa0 \pnrnot0 \widctlpar \aspalpha \aspnum \adjustright \lin0 \
rin0 \itap0 \ls0 \fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \af0 {\
langnp1033 6\}The advising bank examines the documents and, if they are in
compliance with the terms of the letter of credit, releases the payment to the
seller.}{\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \
lang1033 \langnp1033 \par }\pard \plain \ql \li0 \ri0 \lisb0 \lisa0 \pnrnot0 \
widctlpar \aspalpha \aspnum \adjustright \lin0 \rin0 \itap0 \ls0 \fs21 \kerning2 \
dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033 \par }\pard \plain \ql \li0 \
ri0 \lisb0 \lisa0 \pnrnot0 \widctlpar \aspalpha \aspnum \adjustright \lin0 \rin0 \
itap0 \ls0 \fs21 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \af0 {\b0 \
fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \f0 \lang1033 \langnp1033
7\}The buyer, upon receipt of the goods or services, pays the issuing bank for the
letter of credit.}{\b0 \fs24 \kerning2 \rtlch \ltrch \dbch \af2 \hich \af0 \loch \
f0 \lang1033 \langnp1033 \par }}

Assignment On Moneytary Policy

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deflangfe1033 {\fonttbl {\f0 \froman \fcharset0 \fprq2 {\*\panose

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