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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 foreigners and smaller budget deficits in East Asian countries.
Q. To answer the following question, please refer to the figure below. Concentrating only at the lower left quadrant, discuss the relationship between the U.S. real money supply a
Q. Why are prices of factors of production not equalized? Answer: Again this statement may not or may be argued to be true. On the other hand, the growth and large volume in
Q. Using the DD - AA framework, show the phenomenon of overshooting. Use a figure to explain when it is taking place. Answer: The figure below illustrates the phenomenon of ov
Q. Present the case against floating exchange rates. Answer: 1.The discipline obligatory on individual countries by a fixed rate would be lost. 2. Undermine specu
distinguish between net terms of trade and gross terms of trade
Q. Analyze the effects of devaluation on an economy. Answer: Devaluation basis a rise in output a rise in official reserves and an expansion of the money supply. A private cap
In the Ricardian analysis, why does each trading partner have an incentive to produce at an endpoint of its production-possibility frontier? Why are prices of factors of production
Present and explain the Fundamental Equation of the Monetary Approach. Answer: Suppose E $ /E = P US /P E and that domestic price levels depend on domestic money demands and
Question 1: The main challenge facing governments in the 21st century revolves around containing and/or downsizing of public spending. Explain why reduced government interventi
What will be the effects of an increase in real national income on the interest rate? Answer: An enhance in real national income will increase the interest rate. If investment
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