Difference between Floating and Fixed Exchange Rates - Assignment Example

Running head: International relations INTERNATIONAL RELATIONS Insert Insert grade Insert April 29, InternationalRelations International Relations is a very crucial success component in a particular nation, in addition to the global realms. International relations are boosted by the economy of a country as well as the combined economy of the world as a whole. The status of peace, health as well as the extent to which these components last determines the sustainability growth levels. Sustainable development is also as a result of the interplay of economic, political, social, and cultural forces in operation within the international realms. However, environmental decay has overtaken the world in the recent years, owing to the poor interaction of the herein stated forces. The discussion in this paper investigates the difference between floating and fixed exchange rates and the impacts of each style to a particular country in terms of benefits. The study of the guns vs. butter argument and what is meant by a peace dividend in International Relations is found crucial at this juncture to enhance the understanding of international relations. An overview of what sustainable development will also be provided in addition to relevance of three warning signs of environmental decay that has international consequences. What is the difference between floating and fixed exchange rates? How might each style benefit a particular country? Provide examples The value for money for utilization in distinct countries is determined by the exchange rates. The exchange rates entail the utilization of interconversional figures from a value in one country, for ease of use in another country. Two main types of exchange rates are in existence, whose determinants are the usage terms and regulations. The currency amount that is set in advance prior to its reception is often identified as the fixed rate. The exchange rate termed as floating currency is often dependent on the exchange time and season, hence not fixed. The fixed currency exchange rate is also termed as pegged from in that the government via the central bank sets a particular value and formalizes it for official use, such that no alterations can be made in regards to that currency. On the other hand, the floating rate is also referred to as a self-correcting rate, since its value is dependent on the supply and demand ratios in the private market. Secondly, a fixed exchange rate creates room for certainty and predictability for those people involved in trade and other business activities. The floating rate has no room for certainty or predictability since the market forces often determine the value for exchange at a particular time or season. The sustainability aspect is also observed when a country has managed to fix its rates of exchange while the aspect is not really considered in the floating exchange since markets demands and supplies can shift at any time depending on the availability of goods and customers. The fixed exchange rates can only be regulated by a an authoritative body for instance the government via the utilization of the central bank while the floating rate can also be determined by the international corporations depending on movement of international products in and out of the market (Heakal, 2011). The fixed currency exchange rate is quite beneficial in a particular country due to its sustainable aspect. The fact that it is never affected by the market dynamics is vey crucial in the growth of the economy since it is until the other parties change their currencies for concession with the available currency. The business entities in the country are at all times assured of certainty in the exchange rates, hence a factor for the boost of their production morale. Stability of currency is also a crucial component that is promoted via the fixed rates since no fluctuations are expected to occur at any time. The floating rate on the other hand is beneficial in its inclusion of compensation dynamics. The fact that demand and supply shifts are the currency determinants makes it possible for no country to incur a loss in case exchange rates are conducted. This is also crucial when the counteracting the forces of a black market in any country in order to counter economic inflations. Both the fixed and floating rates are crucial in distinct ways to a country (Ghosh, 1996). What is the “guns vs. butter” argument, and what is meant by a “peace dividend” in International Relations? Have we ever had one? If so, was it a useful tool for building economic strength? Was it long lasting? A gun versus butter argument entails the requirement for making of concrete decisions in regards to government spending in a country. The occurrence of such arguments is usually attributed to the need to stabilize the world economy in an urge to counteract inflations. The recent years have seen many nations aspire to incorporate the interplay of both gun and butter in the economic balance strategies. Guns entail the investments that are made by the government in the purchase of military equipments while butter entails the investments made in the purchase of other products in regards to the urge of economic reconstruction. The gun arguments are again referred to as those involving many spoken words on the contrary to the butter ones aimed at taking actions for bettering a situation (Groves, 2007). Peace dividend in the international relations implies the civilian product quantities that are produced when the government spending on military defence reduces in a country. There is no certain period when the spending of government on military strength is reduced, since every country’s security needs keep on rising. The current world is mutually dominated by warring communities and countries, a factor that makes peace dividends rare to obtain. The world and individual countries have sparsely enjoyed peace dividends, though the periods after world wars in the 20th century have been ample in the reconstruction of the economy. For instance, after the 9/11 terrorist attack in America; it was no longer the time for the purchase of more arms but one to embark on the American economy reconstruction via a peace dividend. There have been rampant peace dividends in every country, but the only challenge is their periods of operation. Peace dividends are extremely short-term since the outbreak of continual warfare at distinct times always alerts the government of war occurrence at any time, increasing the demand for more weapons. Thus, a particular country never generates adequate time for investment in butter and this has led to the recent inflations in the country (Groves, 2007). The international relations are adversely affected due to the drastic shifts of objectives into armament whenever an international participant has a political challenge, and which are rampant. Nevertheless, peace dividends occurring after a war event are crucial economic builders and restorers. It is often a time for the discovery by the business entities as well as international corporations to realize their globalization and market objectives. This entails the setting of strategic methodologies that are aimed at production of other civilian goods that boost the economy in terms of exports, imports, as well as domestic consumption. Thus the peace dividend after the war played a pivotal role in the rebuilding the international economy (Griffiths, Callaghan and Roach, 2008). What is sustainable development? Explain it fully and provide examples. Sustainable development entails the fulfillment of present requirements alongside eradication of future generation compromise. The history of sustainable development dates back in the period when human civilizations started to dominate the ecology, believing that transitions must have way in the same. Sustainable development success is based upon environmental, social, and economic dimensions. The development of equitable and resilience sustainability is attributed to the wellbeing of the environmental set up. The environment is interplay of the atmospheric water systems, human consumption management, use of land and the energy production and utilization. For instance, the period ranging from the 1980’s marked by the relationship of sustainability to the Earth and its sustenance of humans, however, recent proves have brought about its relationship with all other natural and artificial systems. The long-term sustainability measurements are based on the population. For instance, the US has a very high population, thus in a better position to acquire sustainability in all aspects including the requirements of fixed exchange rates (Ott, 1998). Effective Planning is a long-term strategy that would enhance sustainable development in all international systems. Vibrant mixed-utilization of high-density national centers and society’s development are duly enabled. Additionally, the mobility realms improvement would act as a rationale to the enhancement of sustainable development. Investments directed towards a quality establishment of infrastructure of public transit, and which is easily accessible is crucial and Phone cell notifications from signage are crucial in the improvement of mutual connectivity and enhancing rich sources of information. The overall economy intervention in every state in the world is crucial as a prerequisite to the development of sustainable development. Unlimited support of businesses both local as well as international as artificial sustainability systems should be a key step. The appropriate utilization of available peace dividends is also crucial in the development of sustainability via investments in butter as compared to guns (Liebert, 1992). List 3 warning signs of environmental decay that have international consequences, explain fully. The living organisms environmental are very crucial in the natural set up. However, recent years have been marked by rampant environmental gradations due to the violation of the natural ecological set up. The world has been dominated by events that act as environmental warnings for their action to counter the environmental decay. Social, economic, and political factors are all contributing rationales for environmental decay. There are vast numbers of warning signs that have developed international impacts over the years. The global warming is the most common warning sign of environmental decay that has international consequences. The utilization of peace dividends in a bid to promote sustainable development in countries has seen countries perform rapid industrializations. The construction of heavy industrial automobiles has led to the release of harmful gases and substances that have depleted the ozone layer leading to drought and famine in the international scope (Meško, 2011). Secondly, the occurrence of dramatic environmental catastrophes has been a predominant sign in the indication of the environmental degradation levels. The world is recently experiencing rampant catastrophes in every part. This ideally indicates that the global powers are out to overexploit the natural resources to the extent of interfering with the natural set up. They are inclusive of the Tsunami earthquakes that recently touched every global power including Japan. The rampant landslides that happen every time are also an indicator of agricultural practices that have been performed even in illegal areas. Thirdly, environmental movements in opposition to conservation environment that have taken pre-eminence in the recent decades are also indicators of the environmental degradation. This entails the movement people from their homeland into others seeking for better jobs and food resources. For instance, the immigration of the Asian community has been predominant since the 18th century into the United States in search for better and greener pastures and the need for promotion of sustainable development (Birkland, 1997). References Birkland, T. (1997). After disaster: agenda setting, public policy, and focusing events. Washington DC: Georgetown University Press. Ghosh, A. (1996). Does the exchange rate regime matter for inflation and growth? Washington DC: International Monetary Fund. Griffiths, M, Callaghan, T. and Roach, S. (2008). International relations: the key concepts. NY: Taylor & Francis. Groves, A. (2007). Discuss the significance of aid and peace dividends for the prospects of post conflict stability. E-IR. Retrieved from http://www.e-ir.info/?p=157. Heakal, R. (2011). Currency Exchange: Floating Rate vs. Fixed Rate. Retrieved from http://www.investopedia.com/articles/03/020603.asp Liebert, M. (1992). Sustainability. NY: Bib. Orton IICA / CATIE. Meško, G. (2011). Understanding and Managing Threats to the Environment in South Eastern Europe. Berlin: Springer. Ott, K. (1998). The Case for Strong Sustainability. Greifswald’s Environmental Ethics. Greifswald: Steinbecker Verlag Ulrich Rose. Retrieved from http://umwethik.botanik.uni-greifswald.de/booklet/8_strong_sustainability.pdf Read More