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Q. "Fixed exchange rates are not even an option for most countries." Discuss.
Answer: Durable fixed exchange rate arrangements may possibly not even be possible unless countries are willing to maintain strict controls over capital movements as China does or else at the other extreme move to a shared single currency with their monetary partners like as in Europe. Still a country following prudent fiscal and monetary policies isn't safe from speculative attacks on its fixed exchange rate.
what are the limitation of comparative advantage?
The Source of Comparative Advantage can be understood as follows: The source of comparative advantage could be productivity differential (Ricardo) or differences in the factor
Q. Discuss the effects of ongoing inflation based on the PPP theory. Answer: Other things equivalent money supply growth at a constant rate eventually results in ongoi
Q. Explain how the money markets of two countries are linked through the foreign exchange market. Answer: The financial policy actions by the Fed affect the U.S. interest rate
It is argued that a tarriff may help promote employment in a single industry, but is not likely to help employment in general
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Q. "A monetary policy is not a policy tool under fixed exchange rates." Discuss. Answer: It is True Under fixed exchange rates domestic asset transactions by the centr
Q. How A Central Bank Fixes the Exchange Rate? Answer: The Central bank should always be willing to trade currencies at the fixed exchange rate with the private actors in the f
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