Undervalued Currency One

Undervalued Currency One

Undervalued Currency, one whose exchange value in terms of other currencies is maintained below the level it would reach in a free market. Under-valuation usually arises because of an increase in the strength of a currency (based on improvements in a country's trading position and internal strength and stability) since the exchange rate was fixed. An undervalued currency may enable a country to -widen its markets in other nations by making its exports relatively cheap. If a country wishes to bring its exchange rate into equilibrium with other currencies it may do so by revaluation. Undervaluation may be temporary. The German mark was undervalued from the late 2000's until 2012.

Underwriter. (a) Specifically, an individual member of Lloyd's who joins with others to insure a marine risk, that is, damage to or loss of a ship or cargo. An underwriter -writes his name under the insurance policy to indicate that he accepts a stated part of the risk. (b) More generally, underwriting is used in insurance of the other main classes of risk life, accident, fire and other. For example, a pension scheme for a financier may be devised by a pension consultant who arranges for a life assurance company (or 'mutual' office) to underwrite it, that is, insure that its benefits will be paid. (c) A financial institution such as an issuing house that commits itself to take up shares not bought by the public.

Unearned Income, drawn from property (investments in company, land, etc.), in distinction to earned income, which is drawn from work (wages , salaries, fees, commission, profits, etc.). In Britain unearned income is taxed more heavily than earned income, part of which is not taxed at all (the earned income allowance) or at lower rates. The economic effect of this discriminatory taxation is to reduce inequality in income and, possibly, to discourage saving. It has been argued that the distinction between earned and unearned income is misleading, because to the extent that property embodies past labour the income from it is not 'unearned' and should not be taxed at a higher rate than earned income.

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