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Q. Explain the following figure:
Answer: The figure depict the effect of a permanent increase in the money supply starting from full employment equilibrium. Subsequent to the initial increase in the money supply and the move of the AA curve to the right from AA1 to AA2 a steadily increasing price level shifts the AA and the DD schedules to the left until a new long-run equilibrium is reached. Note that point 3 is above point 1 for the reason that Ee is permanently higher after a permanent raise in the money supply. The expected exchange rate, Ee has increase by the same percentage as Ms. Notice that beside the adjustment path among the initial short-run equilibrium (point 2) and the long-run equilibrium (point 3) the domestic currency actually appreciates (from E2 to E3) following its initial sharp depreciation (from E1 to E2).
Q. In Foreign and Home there are two factors of production, land and labor, used to produce only one good. The land supply in each country and the technology of production are ex
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Q. Explain the Asian financial crisis as it unfolds beginning with the valuation of the Thai currency in July 1997, followed by the Malaysian, South Korean and Indonesian crises.
The Republic of Ireland has had colossal economic problems for many years. On the other hand, in the last two decade, the nation has experienced a thriving economy and has becom
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draw diagram of price leadership model
describe the U.S role in the world economy
heberler''s theory of opportunity cost notes
Q. Explain how the timing of a balance of payment crisis is determined. Be careful to state all assumptions. Answer: The assumptions of the model are: Prices are el
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