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Current Account Deficit (CAD):
Boon or Bane The general belief is that high CADs are dangerous. In general, this is correct. But the converse that low CADs are good is not. As seen above, a CAD is nothing but a measure of a country's savings gap, i.e., the excess of investment over savings. It represents the net transfer of resources from the rest of the world to the country running the deficit. Therefore, in a developing country, with a huge needs for funds for investment, a CAD makes sense. It allows it to finance investments that would have been well beyond what it could hope to finance with its own savings. On the flip side, CADs are to be financed by foreign capital inflows. The capital flows are fickle, can be reversed, and have to be serviced. The right CAD for any country, therefore, depends on its ability to absorb and service capital inflows. If these resources can be deployed productively and in ways that enhance its ability to repay, a high CAD to GDP ratio is nothing to worry about. But if they cannot, then it is inviting trouble. Too high a ratio canprove unsustainable in the long run as it did in East Asian economies in 1998and in Mexico earlier.
To that extent low ratio has its advantages. But, very low ratio carries with it an opportunity cost?of not being able tobenefit from resources that could be drawn from outside.
Q. Explain about Gross Domestic Product? Gross Domestic Product:Value of all the services and goods produced for money in an economy, evaluated at their market prices. Excludes
Q=2h find the marginal point. where q is the quantity of electricity in MW-h and h is the amount of water (in 100s of liters per hour)
A market is nothing more or less than the locus of exchange, it is not of necessity a place, but easily buyers and sellers coming together for transactions. Transactions happen
CAUSES OF SLOW GROWTH: A recent empirical study seeks to explain statistically the variations in inter-country growth rates. The global pattern of growth is shown to depend on
fundamental problems
demand for two market are P1=15-Q1&P2=25-Q2.the monopoly TC is C=5+3(Q1+Q2).What are ,output,profit&MR if the monopolist can price disc? riminate
MRTS and Marginal Productivity The change in output from change in labor equals: The change in output from change in capital equals
What is Economic Theory? An economic theory that can be considered an axiomatic approach comprise a set of assumptions and circumstances, an analytical framework and explanatio
typical assumptions
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