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Q. Explain why under fixed exchange rate, monetary policy is ineffective whereas under floating exchange rate it is effective in rising output. Answer: In floating by purchasi
what i deficit balance of payment.
Q. "No country is abundant in everything." Discuss. Answer: the idea of relative (country) factor abundance is (like factor intensities) a relative concept. When we recogniz
Q. Explain why Relative PPP is useful when comparing countries that base their price levels on different product baskets. Answer: For instance If the U.S price level increase
Q. What is the theory of Second Best? Answer: The principal of the second best notify us that when an economy suffers from multiple distortions the removal of only a few
As the world seeks to find alternative means to produce clean power, fuel cells emerge as a promising source of power generation. Depending on their type, fuel cells can be utilize
INTERNATIONAL TRADE can be understood as follows By the international trade, we signify the exchange of goods and services between different countries. For any individual count
Q. Suppose Russia's inflation rate is 200% over one year, but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swis
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
Q. Explain how the timing of a balance of payment crisis is determined. Be careful to state all assumptions. Answer: The assumptions of the model are: Prices are el
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