What Are Some of the Reasons Central Banks and Treasuries

question 63

Essay

What are some of the reasons central banks and treasuries enter the foreign exchange markets, and in what important ways are they different from other foreign exchange participants?

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Definitions:

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity supplied by producers, resulting in market stability.

Inelastic Demand

Inelastic demand occurs when consumers' purchase quantity does not significantly change in response to a change in the price of the product.

Bovine Infertility

The inability of cows to conceive and produce offspring.

Supply Curve

A graphical representation of the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply at each price.