New design for Economicsguide.net


The aim of Economicsguide.net is to give a helping hand to Economics students in their study efforts. To make the website more organized and user-friendly, I have re-designed the whole website.

Mouseover the tutorial tab at the top horizontal nav bar to see the available tutorial topics. New topics will be added this month. Once you read the tutorials, you can do the quizzes from the quizzes section to test your understanding.

There is also a Q&A section where you can post any question regarding the subject or any subject, as long as it is taught in Maldivian schools. And I must stress, Economicsguide.net IS NOT A POLITICAL WEBSITE.

I hope you find this website useful.

Mohamed Amir

Violence is bad for the economy. We all have a role to play to solve the economic problems.

We have seen violent protests held in the last two days on the streets of Male’ by youths and opposition political parties.

The purpose of the protests is to express anger at soaring food prices. The protesters demanded the US$ be brought to the previous official rates of MRF12.85 per US Dollar.

Of course, everyone would like the food prices to go down, the US$ be more available at cheaper rate than now, and people love to raise their living standards. However, is violence the best way to achieve this?

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We must think about economic costs/opportunity costs rather than the immediate financial cost

Economics is about making choices in the face of unlimited wants and limited resources. Economists study the choices humans make. Why they make certain choices, what they hope to gain from the choice and how much they give up each time they choose.

We are forced to make choices in our daily lives because not all our wants can be satisfied with the available resources. When we make choices, we have to give up something else.

Now, let us try to understand the difference between financial costs and economic costs.

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Move from a 'pegged system' to a 'managed float'

On 10th April 2011, MMA and the government announced the change of the country’s exchange rate system from a fixed (pegged to US$) exchange system to a managed float.
Under the new system, Maldivian Rufiyya is allowed to fluctuate against US Dollar within a range of MRF10.28 to MRF15.42.
If a currency is allowed to float, the exchange rate will fluctuate according to the demand and supply of the currency with respect to the compared currencies.
What will be effects of this move?

The possible effects are:

  • The immediate effect will be that the Maldivian Rufiyya will depreciate against US Dollar. This is already happening and was expected since US Dollar was being traded at a much higher rate in the black market compared to the official rates.
  • The expensive US Dollar will increase the market prices of most(if not all) of the imported goods and services. The shop keepers are funny in this case since they have even increased the prices of the items that they acquired when the Dollar was still at MRF12.85. What they don’t realize is that any harm to the economy will in turn harm them too.
  • Read more