What implications does the monetary approach have

Reference no: EM131900065

Problem

1. What are some major disadvantages of the automatic adjustment mechanism under a system of fixed exchange rates?

2. According to the monetary approach, balance in a nation's payments position is restored when the excess supply of money or the excess demand for money has fallen to restore the equilibrium condition: Money supply equals money demand. Explain.

3. What implications does the monetary approach have for domestic economic policies?

Reference no: EM131900065

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