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Q. Is it possible that if positive scale economies characterize an industry, that its equilibrium can be consistent with purely competitive conditions? Explain how this would happen.
Answer: Yes if the degree economies were external to the firm afterwards there is no reason why the firms may not be in perfect competition.
Q. Define countertrade. Discuss the different forms of countertrade? Counter trade means all types of foreign trade in which the sale of goods to another country is associated
Q. Explain the following figure: Answer: The figure depict the effect of a permanent increase in the money supply starting from full employment equilibrium. Subsequent to the i
Q. Using a figure, show that under full employment, a temporary fiscal expansion would increase output (over-employment) but cannot increase output in the long run. Answer: A t
Countries are indulged in trade because there are mutual gains from trade. But then, what are these gains which they obtain, and how are these realized? Comparative advantage theor
The recessionary gap in a country is $1 trillion. The spending multiplier is 5. For every $50 billion borrowed, interest rates increase by 0.1 %. For every 0.1% increase in interes
"Although the price levels appear to display short-run stickiness in many countries, a change in the money supply creates immediate demand and cost pressures that eventually lead t
1. International trade: (a) Explain the concept of comparative advantage between two countries (use a numerical example to illustrate, and do not use the identical example in th
difference between classical and neo classical theory of international trade.
What are the government's fiscal policy options for a recessionary gap caused by cost-push inflation? Use the aggregate demand-aggregate supply model to show the impact of these p
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
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