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Q. What is the national income identity for a closed economy? Answer: Y = C + I + G.
Q. If the central bank does not purchase foreign assets when output increases but instead holds the money stock constant, can it still keep the exchange rate fixed at E 0 ? An
is the stolper samulson theorem is relevant in these days
Q. "The line distinguishing between external and internal goals can be fuzzy." Discuss. Answer: True For instance employment target for export industries when export growth m
Q. What are the factors affecting the demand for foreign currency? Answer: Three factors that affect the demand for foreign currency are risk, expected return, and liquidity.
Q. What is the policy of sterilization? Give an example. Answer: • Untainted foreign exchange intervention - policy by which central banks perform equal foreign
WHAT ARE THE ROLES OF FOREIGN TRADE IN ECONOMIC DEVELOPMENT
Q. Explain how an increase in government spending would affect the DD-AA schedule in the short run. Answer: A raise in government spending will raise aggregate demand, which wi
Q. How could the U.S. government justify its decision to offer a subsidy to a profitable and successful business? Answer: It could indicate that this $10 million pump-priming
Q. Given the opportunity to sell at world prices, the marginal (opportunity) cost of selling a ton domestically is what? Answer: $5/ton.
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