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Q. How can long-run values in the real exchange rate change?
Answer: A elevate in world relative demand for U.S output origins a long-run real appreciation of the dollar against the euro a fall in the real dollar/euro exchange rate.
A proportional expansion of U.S output causes a long-run real depreciation of the dollar against the euro (a rise in the real dollar/euro exchange rate).
Q. Using a figure, show that under full employment, a temporary fiscal expansion would increase output (over-employment) but cannot increase output in the long run. Answer: A t
Q. Suppose E is fixed at E 0 and that the asset markets are in equilibrium. Suddenly output rises. What monetary measures keep the current exchange rate constant given unchanged e
Q. What are the factors that determine the amount of money an individual desires to hold? Answer: Three major factors that are first one the expected return the asset offers co
Explanation with critical appraisal
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