Define currency . And write any three factors.
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What are three factors that determine the value of money?
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The three main factors that determine the value of money are exchange rates, the amount of dollars held in foreign reserves, and the value of Treasury notes.
The most important single factor determining the value of money is the basic rule of supply and demand. The more demand for a given currency or item, the more that currency or item is worth. That is especially the case when demand exceeds supply. Because every country maintains its own currency, and because the political and economic situation in each country varies, sometimes minutely, and sometimes massively, the value of each country's currency varies accordingly. The less confidence in a particular currency, the weaker the demand for that currency and the lower its value. When a foreign currency is determined to be worth a specific amount of the U.S. dollar, to use one example, the value of the American currency is measured in how much of the foreign currency is needed to buy a single dollar. In other words, it may require ten thousand Indonesian Rupiah to buy one U.S. dollar (the actual exchange rate when I was last in Indonesia some years back). The value of American money, then, is much greater than that of the Indonesian currency.
HOMEWORK HELP > MONEY
What are three factors that determine the value of money?
print Print
document PDF
list Cite
The three main factors that determine the value of money are exchange rates, the amount of dollars held in foreign reserves, and the value of Treasury notes.
The most important single factor determining the value of money is the basic rule of supply and demand. The more demand for a given currency or item, the more that currency or item is worth. That is especially the case when demand exceeds supply. Because every country maintains its own currency, and because the political and economic situation in each country varies, sometimes minutely, and sometimes massively, the value of each country's currency varies accordingly. The less confidence in a particular currency, the weaker the demand for that currency and the lower its value. When a foreign currency is determined to be worth a specific amount of the U.S. dollar, to use one example, the value of the American currency is measured in how much of the foreign currency is needed to buy a single dollar. In other words, it may require ten thousand Indonesian Rupiah to buy one U.S. dollar (the actual exchange rate when I was last in Indonesia some years back). The value of American money, then, is much greater than that of the Indonesian currency.
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