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Q. How did the international monetary system influence macroeconomic policy-making and performance during the gold standard era (1870 - 1914)?
Answer: London was the hub of the international monetary system. The most important responsibility of the central bank was to preserve the official parity between its currency and gold. To sustain this price the central bank desirable an adequate stock of gold reserves. Central banks try to avoid sharp fluctuations in the balance of payments.
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What can explain the failure of relative PPP to hold in reality? Answer: Government procedures of the price level differ from country to country. One cause for these differe
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Q. Discuss the main factors affecting the position of the DD schedule. Answer: The level of government taxes, demand, and investment and the domestic and foreign price
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