Managed Exchange Rate Systems part 2

To avoid the volatility and uncertainty that often accompany a floating exchange rate, some governments and central banks choose to manage or peg their currency’s value against another currency. This lesson explains the tools by which an exchange rate can be managed and maintained within a range of values, using the Swiss National Bank’s decision to peg the Swiss franc against the euro in 2011 as an example.

Managed Exchange Rate Systems part 1

To avoid the volatility and uncertainty that often accompany a floating exchange rate, some governments and central banks choose to manage or peg their currency’s value against another currency. This lesson explains the tools by which an exchange rate can be managed and maintained within a range of values, using the Swiss National Bank’s decision to peg the Swiss franc against the euro in 2011 as an example.


Income Elasticity of Demand

Our final lesson on elasticities will examine the responsiveness of consumers of a good to a change in their own incomes. The lesson introduces the formula for YED, gives an example of how to calculate YED for both a normal good and an inferior good and explains the different possible values of the YED coefficient.

Cross Price Elasticity of Demand (XED) and its Determinants

This lesson introduces the concept of cross price elasticity of demand, or the responsiveness of consumers of one good to a change in the price of a related good. We’ll outline the formula, walk through a couple of examples, interpret the results and discuss what factors determine the cross price elasticity of demand between two goods.

Price Elasticity of Supply and its Determinants

This lesson introduces the concept of price elasticity of supply, including the formula, calculating PES, and an explanation of the determinants of PES. The responsiveness of producers of two goods, cotton and blue jeans, are illustrated as an example of how PES may vary for different goods.