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Q. Suppose both governments offer their respective company a $10 million subsidy. Answer: Mutually companies would enter the market as each one knows that regardless of the o
what are the limitations of net barter terms of trade
Q. Explain why under the gold standard a perpetual surplus or a perpetual deficit is impossible. Answer: Since specie inflows drive up domestic prices and restore symmetry in
Q. Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD and where both the output and asset markets are out of equilibrium. Explain what will h
Q. What prompted the EU countries to seek closer coordination of monetary policies and greater exchange rate stability in the late 1960s? Answer: 1. To improve Europe's role
What effect do non-tradable goods have on PPP? Answer: The consequence is quite substantial. In 1997 the production of non-tradable goods accounted for about 55% of U.S GNP.
Explain Purchasing Power Parity. Answer: PPP ( ) states that the exchange rate between two countries' currencies equals the ratio of the countries' price levels. A decr
construct a production possibilities frontier that represents japan''s goal of producing both cars and housing. Assume the japanase economy is in a downtyrn and indicate with an Xt
HOW TERMS OF TRADE IS DETERMINED
Q. It is still the conventional wisdom in the U.S. that compliance with NAFTA needs is having a deleterious effect on U.S. highway safety standards, on U.S. pollution and other en
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