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Q. Explain the difficulties in naming the new European currency. Answer: Amongst the reasons: Maintenance the name ECU would be misleading the ECU depreciated sharply ag
"Although the price levels appear to display short-run stickiness in many countries, a change in the money supply creates immediate demand and cost pressures that eventually lead t
Q. Evaluate the Argentinean Convertibility Law of April, 1991. Answer: Excellent idea in the short run disastrous idea in the long run. The law was discarded only in Ja
Q. "Trade liberalization could precede capital account liberalization." Discuss. Answer: It is probably true. The issue is associated to the theory of second best and
Q. What are the main factors determining the aggregate money demand? Answer: Three major factors: the price level, interest rate and real national income. A increase i
Using the Heckscher-Ohlin model, discuss how the differences in supply and demand conditions between countries create a basis for trade.
Suppose that industry 1 is monopolistically competitive, with a CES sub-utility function: U(c1,c2 ) = c1? + c?2 , 0 We let the marginal costs be denoted by c1(w,r), and the fixe
Q. Analyze the effects of an increase in the European money supply on the dollar/euro exchange rate. Answer: The major points are: A raise in the European money supply will re
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 c
Q. Discuss the values of private saving in closed and open economies. Answer: In the closed economy private saving Sp is equal to I + (G - T) and in an open economy private sav
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