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Q. "Under floating rates, the economy is more vulnerable to shocks coming from the domestic money market." Discuss.
Answer: It is true statement, under floating rates an increase in real domestic money demand causes income to fall and domestic currency to appreciate. If the increase in real domestic money supply is permanent it will lead ultimately to a fall in the home price level.
Under a fixed exchange rate the variation in real money demand doesn't affect the economy at all. To protect the home currency from appreciating the central bank buys foreign reserves with domestic money until the real money supply go up by an amount equal to the rise in real money demand. This intervention has the consequence of preventing any change in output or the price level.
Q. Explain why price levels are lower in poorer countries. Answer: One theory explicate the difference in prices on different endowments of capital and employment Bhagw
Q. Explain why East Asian countries have done so well relative to South American countries. Answer: Generally the reasons are less moral hazard less government debt to forei
In the International Medical Center, clients are patients who use the services provided by the hospital, such as the health program, preventive services, and surgery. Other custom
Is there is Few or many national currencies
Q. In autarky, Country P was producing at point 5. With trade, could its production point be found above or below point 5? Explain why. What must happen in the K/L intensity ratio
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Q. The United States seems at times to have a totally schizophrenic attitude toward protectionism. The United States was the country that proposed the establishment of the World
1. Explain why many Asian countries set up Export Processing Zones and why China set up Special Economic Zones. What are the similarities and differences between EPZs and SEZs?
Q. Write an essay on the importance of a sound banking system in developing countries. Answer: Students must describe the phenomena of moral hazard as a part of their answer,
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
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