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Q. Explain why it may make sense for the United States, Japan, and Europe to allow their mutual exchange rate to float?
Answer: Even though these regions trade amid each other the extent of that trade is modest compared with regional GNPs as well as interregional labour mobility is low.
Q. What factors lie behind capital inflows to the developing world? Answer: Several developing countries have received a lot of capital inflows that lead them to an
Q. Using the diagram, show what happens to the composition of production (that is quantity of cloth per 1 unit of food) in Australia once trade is established between the two coun
the Trade and the Economy
Q. Discuss the problems that the EMU will face in the coming years. Answer: Europe isn't an optimum currency area so asymmetric economic developments within different cou
Welfare Effects of Tariff can be understood as follows: It is important to understand what the welfare effects for the tariff are. While a tariff might seem desirable because i
Q. Explain why, according to Feldstein and Horioka, one should expect that domestic investment rates diverge widely from saving rates. Answer: The decisions of corporations t
Describe and explain the relationship between expected inflation rates in two countries and their interest rate differential according to the PPP theory. Answer: Expected pric
diagram
Assume that Deborah Electronics expects a delivery of Fujitsu laptops in a month from a Japanese supplier. Each laptop sells at $1000 in a retail market whereas the import cost is
Q. Explain why it may make sense for the United States, Japan, and Europe to allow their mutual exchange rate to float? Answer: Even though these regions trade amid each other
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