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Contents
Introduction3
What is a important Bank?3
What clauses inflation?3
What is the spot of a central bank?3
How do interest rate mask inflation?3
How do exchange range affect inflation?3
What is MAS?4
What is NEER?4
Singapores exchange rate insurance4
Australias exchange rate policy5

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Introduction
What is a Central Bank?
A central bank, reserve bank, or monetary authority is a public institution that manages the nations currency, money supply, or interest evaluate. These banks do this primarily to curb the inflation.
What clauses inflation?
Demand-Pull puffiness - This theory can be summarized as too oft money chasing too few goods. In other words, if contain is development faster than supply, prices will increase. This usually occurs in growing economies.

Cost-Push Inflation - When companies costs go up, they need to increase prices to swan their profit margins. Increased costs can include things such(prenominal) as wages, taxes, or increased costs of imports.

What is the role of a central bank?
There can be some roles of a central bank. But the primary role is to make the inflation of a country, without hindering the economic growth. There argon primarily two ways central banks around the initiation control inflation in their respective countries:
1.



By lordly interest rates: Countries such asUnited States, Australia, India, and so on.
2.By controlling exchange rate: Countries such as Singapore, Hong Kong, and so on.
How do interest rates affect inflation?
If the interest rates be increased, borrowing becomes difficult and people see an incentive in saving money, as the interest rates be high. These factors pull money out of economy, and hence liquiditydecreases. Consequently, the demand for goods in the market reduces and prices are controlled.
For countries such as India and United States, where exports and imports are considerably low compared to GDP, it makes sense to regulate interest rates in order to curb inflation....If you want to get a full essay, order it on our website: Orderessay



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