CNBC Explains: Currencies
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In a good economy, gradual inflation is considered a good thing, but in tougher economic times, too much inflation is a serious problem. CNBC Explains.
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If you understand inflation, deflation is simply the flip side of the coin. In fact, sometimes it referred to as “negative inflation.”
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While moderate inflation is actually a good thing for a healthy economy, inflation can also occur when the economy is stagnant.
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Although inflation is not necessarily a bad thing for a growing economy, there have been numerous historical examples when inflation runs wild, a situation called hyperinflation. CNBC explains
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When there is a disparity in interest rates between countries, investors have an opportunity to employ a currency trading strategy called the carry trade.
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You've probably heard about the global controversy surrounding the Chinese currency: international leaders have criticized the Chinese government for keeping the value of the Yuan artificially low, because an artificially undervalued Yuan has serious implications for international trade.
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Countries around the world keep their currencies pegged to the U.S. dollar, but how is this balance maintained? We saw in a previous video how a floating exchange rate can significantly affect international trade, but how is this achieved?
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Salman Khan of the Khan Academy explains what China's currency situation means for U.S. consumption and how it affects the entire U.S. and global economies.