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Q. Illustrate why Argentina, one of the world's richest countries at the begning of the twentieth century, has become progressively poorer relative to the industrial countries. [
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Q. Explain why it may make sense for the United States, Japan, and Europe to allow their mutual exchange rate to float? Answer: Even though these regions trade amid each other
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Q. Explain why the exchange rate model based on PPP is a long-run theory. Answer: PPP theory is a financial approach to the exchange rate. It is a long-run theory for
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Q. An export subsidy has the reverse effect on terms of trade to the effect of an import tariff. Domestically a tariff will raise the price of the import good, deteriorating the
Q. Explain the issues involved with the Fed acting as a lender of Last Resort (LLR). Answer: On the one hand LLR make possible the Fed to avoid panic and disturbance to
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