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Q. Discuss studies based on the interest parity conditions.
Answer: Generally the formula doesn't hold and isn't a good predictor of future devaluations. Even poorer it failed to predict accurately even the direction in which the spot exchange rate would change.
Question: Banks contribute to the economic development of a country. Banks have always been financing projects that help individuals and enterprises fulfill their plans. Howev
Q. Explain why Relative PPP is useful when comparing countries that base their price levels on different product baskets. Answer: For instance If the U.S price level increase
Q. Explain why under the gold standard a perpetual surplus or a perpetual deficit is impossible. Answer: Since specie inflows drive up domestic prices and restore symmetry in
what is the nature of the proximity-concentration that firms have to deal with then making decision regarding foreign direct investment?
what is world trade
Q. Why do governments prefer to avoid excessive current account surpluses? Or, why are growing domestic claims to foreign wealth ever a problem? Answer: On behalf of a given l
Discuss the relationship between PPP and the Law of One Price. Answer: The law of one price is applies to individual commodities while Purchasing Power Parity applies to the g
Q. What are the predictions of the PPP theory with regard to the real exchange rates? Answer: The real exchange rate among two countries is a broad summary measure of
HOW TERMS OF TRADE IS DETERMINED
What is the significance of the observations made by OECD in this case study regarding “The OECD economies are more strongly dependent on the production, distribution and use of kn
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