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Illustrate the problem for UK economic performance
This is a foremost problem for UK economic performance and helps elucidate the persistent deficit on the current account of balance of payments. UK has been a net importer of goods for many decades and though the UK has a strong service sector, British households have become dependent on imported goods. The main problem facing the UK is large current account shortages which have been incurred since 2000 have been financed by borrowing from emerging-market nations specifically China. This is not a maintainable position. If China were suddenly to decide to sell its holdings of financial assets, denominated in sterling that it has accumulated because of financing the UK's imports from China, the £'s exchange rate would go into free-fall. Though this would make Britain's exports more price competitive in the short run at least UK inflation would rise dramatically, unemployment will grow and standards of living will fall.
explain circular flow of income in an open economy
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I am trying to figure out how to calculate the eqilibrium level of income and the multiplier
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what is static and dynamic multiplier in keynesian theory?
what is difference b/w dynamic and static multiplier
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Christina Romer and Jared Bernstein in "The Job Impact of the American Recovery and Reinvestment Plan" calibrated the impact of the proposed expansionary fiscal policy (we know it
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