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Q. How were the initial members of EMU chosen? How will new members be admitted? What is the structure of the complex of financial and political institutions that govern economic policy in the euro zone?
Answer: EU countries must persuade:
a) Small inflation rate no more than 1.5 percent over the average of the three EU member states with the lowest inflation.
b) A steady exchange rate within the ERM.
c) Public-sector shortage no much high than 3 percent of its GDP in general.
d) A public debt less than or approaching a reference level of 60 percent of its GDP.
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Q. Explain why one can write the demand for money as follows: Md = P L (R, Y) Answer: The collective money demand is proportional to the price level. Imagine that every prices
What constitutes the basis for trade? What are the gains from trade in terms of production and consumption? Use theories and examples from a country of your choice.
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Q. Economic theory in general and trade theory in particular are replete with equivalencies. For illustration, it is argued that for any specific tariff one can search an equival
Assume that Deborah Electronics expects a delivery of Fujitsu laptops in a month from a Japanese supplier. Each laptop sells at $1000 in a retail market whereas the import cost is
Q. Explain why in practice the extent to which a measured balance of payments disparity, either a surplus or a deficit, will affect home and foreign money supply is quite uncertain
Q. Explain how the AA schedule is derived. Answer: For a fixed real money supply an enhancement in output leads to an increase in the domestic interest rate. In the foreign e
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