What is the advantage of changing currency notes?
Brings More Inflation Government prints new notes without keeping specific reserves in their valet’s. The excessive new notes printing increases the amount of money supply which further promotes inflation in an economy.
What is the disadvantages of demonetisation?
The biggest disadvantage of demonetisation has been the chaos and frenzy it created among common people initially. Everyone was rushing to get rid of demonetised notes while inadequate supply of new notes affected the day to day budgets of citizens.
What are the advantages of devaluation of currency?
Currency devaluations can be used by countries to achieve economic policy. Having a weaker currency relative to the rest of the world can help boost exports, shrink trade deficits and reduce the cost of interest payments on its outstanding government debts.
What are the advantages of a weak currency?
A weak currency may help a country’s exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets.
What are the advantages and disadvantages of paper currency?
Advantages of paper currency are that it’s easy to use and cheap to produce and can be created on demand. Disadvantages are that it is fragile and its value is subject to inflation and changes in public confidence.
What are the advantages of a single currency?
A single currency gets rid of all this uncertainty within the single currency zone, and should encourage trade (within the zone). “One size fits all policy” – a single currency requires a single monetary policy.
What are the pros and cons of a currency board?
Currency boards offer stable exchange rates, which promote trade and investment. Their discipline restricts government actions. Wasteful or irresponsible governments cannot simply print money to pay down deficits. Currency boards are known for keeping inflation under control. Currency boards also have downsides.
How does a currency board affect the money supply?
Management of the exchange rate and the money supply are taken away from the nation’s central bank, if it has one. In addition to a fixed exchange rate, a currency board is also generally required to maintain reserves of the underlying foreign currency. A currency board is an extreme form of a pegged exchange rate.