Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Discuss the effects of ongoing inflation based on the PPP theory.
Answer: Other things equivalent money supply growth at a constant rate eventually results in ongoing price level inflation at the same rate as the money supply growth but changes in this long-run inflation rate don't affect the full-employment output level or the long-run relative prices of goods and services.
The interest rate though is affected by continuing growth in the money supply inflation. This is able to be shown by combining PPP with the interest parity condition.
To demonstrate it analytically recalls that the condition of parity among dollar and euro assets is.
Interest rate in the United States is equivalent to interest rate in the euro countries plus expected depreciation of the dollar.
as well as according to relative PPP-
(E$/Et - E$/E,t-1)/E $/E,t-1 = Inflation rate in the United States less inflation rates in the euro countries.
If people anticipate relative PPP to hold the difference among interest rates offered by dollar and euro deposits will equal the difference among the expected inflation rates over the relative horizon in the Europe and U.S.
explore the implications of classicals and neoclassicaltrade theories in Africa trade
Q. Explain how a rise in real income affects aggregate demand. Answer: An increase in domestic real income Y leads to a rise in disposable income Yd. This increases
Q. Use the diagram below taken from Figure 4-4 to identify the pre-trade situation for Australia and Sri-Lanka. Where on the K/L axis will you search each of the two countries? W
Q. It is argued that the United States could be foolish to maintain a free-trade stance in a world in which all other countries exploit prisoner or child labor, or are protectioni
What is the Fisher Effect? Provide an example. Answer: All moreover equal a rise in a country's expected inflation rate will ultimately cause an equal rise in the interest rat
Q.. "A good cannot be both land- and labor-intensive." Discuss. Answer: In a two good or two factor models for instance the original Heckscher-Ohlin framework and the factor
International Capital Mobility is explained below: The case for the international capital mobility was most evidently articulated by MacDougal in 1960. He presented a framework
THE SETTING Country X is blessed with large reserves of natural resources, spectacular physical landscape and a moderate climate. It is inhabited by a well educated and industrious
Q. Explain why the European Union's current combination of rapid capital migration with limited labor migration may actually raise the cost of adjusting to product market shocks wi
WHY IS INTERNATIONAL TRADE IMPORTANT FOR SOUTH AFRICA
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd