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Q. Explain how the AA schedule is derived.
Answer: For a fixed real money supply an enhancement in output leads to an increase in the domestic interest rate. In the foreign exchange market an enhancement in the domestic interest rate leads to a lower nominal exchange rate therefore appreciating the currency. Therefore the relationship among nominal exchange rate and output is negative this leads to a negative slope of the AA schedule which has the ostensible exchange rate and output on its axes.
Development through stabilisation and reform can be understood as follows The reasoning here was that the trade and resource transfer could not, by themselves, lift L
Open Cities & Open Coastal Areas: like the Sezs, aimed at attracting foreign investments and technology. They are : Dalian (Liaoning province); Qinhuangdao (Hebei), Tianjin, Yant
how is exchange rate determined?
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By Using the figures for both the short run and the long run graphs, Demostrate the effects of a permanent increase in the U.S. money supply Economy. Try to line up your figures t
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Q. Using the AA - DD framework, compare the effects of a rise in real domestic money demand under flexible and under fixed exchange-rate regimes. Answer: Under floating an i
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