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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.
Q. Suppose Albania is exporting product B, and experienced economic growth biased in favor of product B as seen in the Figure above. We are also told that Albania's new consumptio
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Q. Explain the credibility theory of the EMS. Answer: In this approach the other EMS countries in effect imported the credibility of the German central bank in fightin
Q. Why do governments prefer to avoid current account deficits that are too large? Answer: A current account debit may possibly pose no problem if the borrowed funds
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Q. Using the GG - LL framework, analyze the effect of an increase in the size and frequency of sudden shifts in the demand for a country's exports. Answer: Such a alter pus
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