The likely implications of a large country engaging in loose monetary Essay

The likely implications of a large country engaging in loose monetary policy for exchange rates - Essay Example The central banks of the economies play a pivotal role in the economic systems for prescribing the monetary policies in the respective nations. The fiscal authorities are in turn checked by the governments of different nations (Gerlach and Wensheng, 2004). In order to efficiently trade in the global economies, the countries in the modern economies use the purchasing power parity conditions to analyze the relative worth of different currencies in an economy. Exchange rate is the modern jargon used by the contemporary economies to judge the terms of trade conditions of nation. This essay will show how the monetary authorities of large economies in the modern world have liberalized or loosened their economies in order to adjust their exchange rates according to the market and sustain a favourable value of their terms of trade in the long run (Keohane, 2013). Situation Analysis Exchange Rate Issues Exchange rates are the rate that defines the value of the currency of a country in terms o f the value of the currency of another country. Exchange rates are either measured in nominal or are measured in real terms. In real terms, it is the ratio of the aggregate price level in the foreign economy to the value of the aggregate price level in the home currency. ... On the other hand, the goods and services available in the foreign markets tend to become expensive to the country. In such situations, the exports of the country become cheaper in terms of value than the imports. The country would demand for less foreign exchange (lesser imports) and possesses an excess supply of the foreign exchange (higher exports). This would thus induce the price of the value of the exchange rate (supply > demand) in the market to fall. A fall in the exchange rate would actually imply the fall in the value of currency of a nation in terms of the currency of another country. Thus in the modern world, monetary authorities constantly try to manipulate and keep the exchange rates suitable to the economic environment of the respective nations (GBM, 2013). Macroeconomic Imbalances The countries in the contemporary world are found to have macroeconomic imbalance conditions. The causes behind the imbalances have been associated with both the internal and external affair s of economies. In some nations like Netherlands, the economy is facing high surplus in the current account but the household debt of the country is increasing at a rapid rate. Moreover, the property bubble (rise in the real estate prices) in the economies of Spain, U.S., Ireland etc have resulted in the heightening of the level of government debt and crisis in the economy. Since 2009, the global financial crisis in the economies of the western world has created a trickledown effect in the less developed economies in the world like India, Brazil etc. As after the emergence of globalization and liberalization, economies in the contemporary world have become entangled with each other. Thus, the macroeconomic imbalances in the form of

Steel making Essay Example | Topics and Well Written Essays - 2000 words

Steel making - Essay Example The process of steel making process involves producing steel from either the ferrous scrap or from iron. During the steel making practice, there is the removal of excessive impurities, among which are silicon, nitrogen, carbon and phosphorous from raw iron, together with other elements of alloy like nickel, vanadium, chromium and manganese, for the production of different steel grades (Mohammed, Stephen, and Seetharaman 1566). The limitation of dissolved gases that include oxygen and nitrogen, as well as all other impurities entrained within steel is important for enhancing the product quality cast from the initial liquid state. Two important processes are involved in steel making; the electric arc furnace, and Basic Oxygen Steelmaking (BOS). The latter uses scrap steel and blast-based liquid pig-iron as the major feed materials, whereas the former makes use of the direct reduced iron or the scrap steel (Mao, Pan, Pang, and Chai 67). The oxygen steel making is exclusively fueled by the reaction’s exothermic nature within the vessels, while the electric arc furnace (EAF) process makes use of the electric energy for melting of the solid scrap material. Introduction of additional chemical energy for EAF processes has enhanced the evolution of the process to almost equal the technological expertise involved in oxygen steel making. The modern processes for steel making can be classified as primary or secondary. The primary steel making generally entails the conversion of liquid iron from an original steel scrap and blast furnace to steel by the melting of scrap, or basic oxygen steel making, and the use of direct reduced iron within the electric arc furnace (Seiji, Yoshiyuki, and Masuro 13). The secondary process of steel making, however, entails the refinery of crude steel prior to casting, and this involves numerous operations in the ladles. The addition of alloying agents occurs during the secondary metallurgy