Bloomberg Market Concepts Study Guide Questions And Correct Answers

Central Banks an Currencies summary: {Ans: -central bankers control the levers of the currency markets -the standard inflation target is 2% for industrialized nations -inflation can lead to a vicious cycle of pay increases leading to price increases -deflation can lead to a vicious cycle of purchase deferrals and layoffs}Currency market mechanics summary: {Ans: -the US dollar equivilent of 5T of currencies are traded every day -1971 marked the dawn of the modern currency market -several contries peg their currencies to other currencies -locked exchange rates are not actually set in stone but are government aspirations -floating currencies move against one another in a matrix -the US dollar is the world's reserve currency and is the most heavily traded currency}GDP statistics are typically released by the government a month or more after the period in question, by which point dozens of other indicators have been released. {Ans: Because GDP statistics are released well after other economic indicators}What are 3 examples of failed pegs? {Ans: 1. British sterling against the Deutsch mark in 1992 2. Mexican peso against the US dollar in 1994 3. Argentine peso against the US dollar in 2002}What is the main reason that