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Q. Illustrate why when Norway unilaterally fixes its exchange rate against the euro but leaves the krone free to float against the non-euro currencies, it is unable to keep at least some monetary independence.
Answer: Any independent money supply vary in Norway would put pressure on krone interest rates and therefore on the krone/euro exchange rate. Therefore by pegging the krone even to a single foreign currency Norway completely surrenders its domestic monetary control.
Q. Explain the credibility theory of the EMS. Answer: In this approach the other EMS countries in effect imported the credibility of the German central bank in fightin
Q. Explain how an increase in the real exchange rate affects exports and imports. Answer: While the real exchange rate rises domestic products are cheaper relative to
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
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1. Species that have reached the extinction threshold and are on the verge of extinction – beluga whales, African elephants, mountain gorillas and the California condor might be cl
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