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Q. Explain why under the gold standard a perpetual surplus or a perpetual deficit is impossible.
Answer: Since specie inflows drive up domestic prices and restore symmetry in the balance of payments any excess eventually eliminates itself. A shortage of currency direct to low domestic prices and a foreign payments surplus, and any deficit eventually eliminates itself.
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Q. "Even under flexible exchange rate regime, governments should not be indifferent to the behavior of inevitably and exchange rates surrendered some of their policy autonomy in o
Q. How and why did Europe set up its single currency? Answer: The why part of the question is associated to large fluctuations in the exchange rates between the Europe
Q. How did the international monetary system influence macroeconomic policy-making and performance during the post-World War II years during which exchange rates were fixed under t
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Q. Suppose Russia's inflation rate is 200% over one year, but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swis
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