Question

What is used as a “means of maintaining dollar values”? Please explain in detail and pls no handwriting.thanks!

Answer 1

There are different techniques, that are used as means of maintaining dollar values. The first technique is the buy and sell of the dollar and or another foreign currencies that help maintain dollar values. When Dollar depreciates, then buying the dollars and or selling the other dominant foreign currency, is going to increase the value of USD. The reverse takes place when Dollar is appreciating and its value is to put down. The second technique is the change in interests rate. When value of dollar is lower, then increase in interest rate by Fed, starts capital inflows coming to the USA. It increases the demand of USD and USD appreciates. With decrease in interest rate, supply of USD increases and value of USD decreases. The third technique is the monetary policy. With increase in money supply of USD, the value of USD depreciates that helps exporters. While tightening monetary policy, appreciates the value of USD as real value of USD increases.  

Above are some of the techniques, used as means to maintain the dollar value.