Macroeconomics: ECB Actions, Money Market, and Exchange Rate Analysis

This macroeconomics report provides an in-depth analysis of key economic concepts including the equilibrium of the money market, balance of payments, and exchange rates between the Euro and the US Dollar. The report examines the factors influencing these concepts and their implications for economic stability. Furthermore, it evaluates the sufficiency of current European Central Bank (ECB) actions in addressing inflation, particularly in the context of the COVID-19 pandemic, assessing the impact of monetary policies and digital transactions. The report emphasizes the importance of maintaining a balance between money supply and demand, and the significance of a positive balance of payments for economic growth. The analysis also considers the impact of social distancing norms and digitalization on economic activities. The report concludes by highlighting the interrelation between economic factors and the importance of effective monetary policies for sustainable growth.

MACROECONOMICS

Table of Contents
INTRODUCTION.................................................................................................................................3
MAIN BODY........................................................................................................................................3
Equilibrium of money market............................................................................................................3
Exchange rate....................................................................................................................................5
Sufficiency of current ECB actions...................................................................................................6
CONCLUSION.....................................................................................................................................7
REFERENCES......................................................................................................................................8

INTRODUCTION
Concepts of economics are defined as the economic activities and concepts that can
provide a clear view and perspective to deliver different economic circumstances that can
project different dimensions of growth. This project will discuss about the economic concepts
such as equilibrium of money market, balance of payment and exchange rate difference
between euro and pound. The project will also discuss about the sufficiency of the existing
steps to deal with the inflation in against to the existing covid 19 situation. This is important
for the business unit to deal with the situation in the best way possible.
MAIN BODY
Equilibrium of money market
Equilibrium is a point when the supply is equal to the demand in the respective
market. Equilibrium of money market is always a situation when the supply of the money or
the monetary value equate to the demand of the same in the respective market. The ECB
followed the strategy where the price stability in the quantitative term has been followed.
Two pillar approach has also favoured to support the equilibrium of money in the market.
This is a very challenging situation when a proper equilibrium point is achieved of the money
in the market or economy. This is completely challenging to know about the equilibrium
point under the respective monetary market (Chaudhary, Sodani and Das, 2020). Demand and
supply are very rare to match with each other as both the factors and elements are different
from each other. Every year the possible demand of the money increased but this is not
feasible to enhance the supply of the money with the same proportion. Government require
ensuring a strong measure to understand the level of demand and supply of money required
under the respective market. There are not any possible measures that guide the government
to know the exact demand of the money in the economy. This is obvious situation to measure
the supply but to measure and monitor the demand of money in economy is very challenging
to ascertain.
The equilibrium point is certainly different from the other situation. This is essential
for the government to maintain the supply at a same level as the demand of the same under
respective economy. If the demand of the money is more than supply due to any reason this is
a point when the inflation in economy will rise. In case of the opposite situation the value of
money will increase as the inflation will come down. In both the situation the equilibrium

situation would not be achieved by the government. In the recent covid 19 situation when the
supply was completely inappropriate the equilibrium point was challenged as the demand was
more than the supply (Highfill, Georgi and Dubria, 2019). This is necessary for the
government to keep upon the balance between the demand and supply situation of the money
or other monetary resources in the economy. The monetary circumstances are different from
other situation in economy as it is very difficult to measure the level of demand in market.
The need of the people is very hard to measure as the human being want as much the money
as it is already owned so this is tough to monitor to address the demand of the same in the
economy.
The balance of payment
The balance of payment is a term depicted the fact about difference between the
receipt and the payment in the respective economy. The balance of payment is a difference
between the receipt and the payment balance of the respective tenure. The current account
balance has risen from 22.8m as compare to the earlier financial year. This demonstrates that
the balance of payment has been positive for the economy. This is important for every
economy that its possible expenses are less than the income of the respective economy. The
balance of payment is based upon the fact that the possible outflow must be less than the
inflow in the economy (Margulis, 2017). If the balance of balance of payment is positive this
is a negative sign for the economy as it indicate that the economy is spending more financial
resources than it is earning. Every economic growth is depends upon the fact that the income
must be more than the expenses of the economy. In case of the opposite situation the situation
is not positive enough and do not allow the economy to grow and upgrade in a positive
manner.
The balance of payment technique is always an important part of the economic
activities. This require the economy to progress in the positive direction as compare to the
earlier economic situation and circumstances. The balance of payment technique is more like
a measurement of the spending of the government. This technique or practice ensure that how
much the economy is spending and how much the economy is receiving its income. This is
essential for the economy to monitor the level of financial resources it has followed in the
economy and the level of financial resources the economy has witnessed as an outflow from
the economy. The growth of the economy is certainly influenced with the balance
demonstrate under the balance of payment. The balance of current account could raise with

the 22.8 million jump that depicted the strong economic growth in the economy (Naisbitt
And et.al., 2018). This is essential for the overall growth and development of the economy in
market that is address the more inflow in the account than the outflow in the account. It is
making more significant for the economic situation of country that the overall economy
demonstrates more like an inflow then the outflow in the economy. The balance of payment
as a concept is very essential as it clearly demonstrates and indicates about the economic
activities. This is already stated that the growth of economy of country is influenced with the
fact that the level of inflow economy is witnessing and the outflow economy is witnessing. In
case the economy is witnessing more inflow then the outflow this will certainly boost up the
growth of the economy in respective market. This is an obvious fact of the economy that is
require a key inflow and outflow balance.
The current account maintained by the government certainly demonstrate all the key
areas that the country is seeking an outflow. The inflow pay a dominating role in order to
gain the strategic growth for the economic direction of country. This is certainly indicated
that if the economy considers more inflow than the outflow this would be the best possible
way or approach to ascertain the economic growth of country (Papadimitriou, Nikiforos and
Zezza, 2019). In case the government aim to enhance and support the economic growth it
should give emphasis over controlling the outflow by producing the respective imports in
own country. This is important for the government to take on the necessary steps to expand
the growth of the economic situation of country. This is essential that the economy must
desire a strategic edge to upgrade the overall economic situation of country.
Exchange rate
The exchange rate of euro and dollar is such that the value of 1 euro is equal to 1.19
United States dollar. This is a difference between the euro and the dollar that clearly state that
the value of dollar is more than the euro. The dollar is more popular than the euro this
indicates that the value of dollar is more competitive in nature than to the euro. In context to
the currency this is essential that the country upgrade the value of its currency. In majority of
circumstances the currency value is monitored and controlled in comparison to the dollar as
this is the most powerful currency in the world. Majority of the international transactions is
done in dollar. The demand of the dollar is more than any other currency in world this make
it more valuable for the economic circumstances. Exchange rate is a significant element that
certainly demonstrates the comparison between the powerful currency and the domestic
currency (Silva and Silveira, 2017). The dollar contain more value then euro and the possible

reason behind is the fact that the euro as a currency contain less demand in the market then
the dollar in same market. Another possible reason is the growth of the country. The United
States of America is more developed in nature then other countries this fact also state the
more power to the value of currency exchange. If the value of currency exchange is powerful
this certainly attract to more growth in the economic. This is necessary for the economy to
boost the growth by attracting more resources in the bank of economy then the outflow in the
economy. In case the value of currency is better than this also improves the buying power and
capacity of the people belong to the country. The exchange rate is certainly demonstrated the
fact or aspect that it is essential for the economy to attract more resources in favour of the
economy then the outflow. Exchange rate certainly influenced with all elements such as
pricing, inflation, demand, value and all other elements in the economy. All such currencies
that contain more value then the dollar will attract more growth in the international market.
Sufficiency of current ECB actions
The current actions of the ECB is based on covid situation. The decision making is
more like based on the e-commerce transactions, cash less transactions, digital solutions for
the payments, trading and all other transactions are prioritised. The role of all these decisions
has been significant in order to address the situation of the market. The actions are sufficient
to deal with the covid 19 situation. The existing situation allows and favour to the business
entity to deal with all these aspects positively (Taskinsoy, 2019). All these decisions are taken
are sufficiently allow the government to tackle down thee existing covid 19 situation. This is
important that the existing situation would favour and empower to deliver the overall
objectives of the economic activity. This make it more significant in the market to allow and
channelize the existing situation or the economic activity in market.
Social distancing like norms are issued that favour the economist and trading
activities to channelize in the best way possible. The social distancing norms could empower
the digital transactions and trading activities that can empower and support the government to
crease a significant boost in the economic activity. The decisions are sufficiently attracted to
the overall economic growth even in the situation of covid 19 crisis. This makes it more
significant as the government focused more over digitalisation every economic activity. This
could certainly empower the government to support and sustain a well balanced economic
situation (World Bank, 2020). The role of the current norms that can favour and allow the
entity to support the overall economic growth and development of the practices. Current ECB

actions are the one that empower and deliver the overall economic growth and development
possibilities in the market.
CONCLUSION
The economic situation of the country is immensely based on the inflow and the
outflow of the economic activities. This is essential for the economic situation that this makes
it more significant in respect to the inflow and outflow of the monetary values. The overall
economic growth in influenced with the existing current account economic situation. This
make it more certain and significant to effectively progress the transductions and operations.
The current covid situation could be addressed with support of norms like social distancing,
digitalisation and other such practices. All these allow the entities to deliver the best level of
economic transactions that can empower and support the best form of growth and economic
development.

REFERENCES
Books and Journals
Chaudhary, M., Sodani, P. R. and Das, S., 2020. Effect of COVID-19 on economy in India:
Some reflections for policy and programme. Journal of Health Management. 22(2).
pp.169-180.
Highfill, T., Georgi, P. and Dubria, D., 2019. Measuring the Value of the US Space
Economy. Survey of Current Business. 99(12).
Margulis, M. E. ed., 2017. The global political economy of Raúl Prebisch. Taylor & Francis.
Naisbitt, B. And et.al., 2018. The world economy: World overview. National Institute
Economic Review. 244. pp.F37-F48.
Papadimitriou, D. B., Nikiforos, M. and Zezza, G., 2019. Can redistribution help build a more
stable economy?. Strategic Analysis. Annandale-on-Hudson, NY: Levy Economics
Institute of Bard College.
Silva, J. F. and Silveira, V. L., 2017. Portuguese economy: Statistical analysis on the current
account reversal´ s sustainability (Vol. 43). Bank for International Settlements.
Taskinsoy, J., 2019. We Need No Dime from the IMF: Is This a Temporary Illusion or Can
the Turkish Economy Recover from the Current Recession without the IMF
Loans?. Available at SSRN 3417431.
World Bank, 2020. The Economy in the Time of Covid-19.