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Q. How did countries use their policy tools to regain internal and external balance after the first oil shock of 1973?
Answer: Seeing that the recession deepened over 1974 and early 1975 most governments shifted to expansionary economic and monetary policies. The OPEC countries couldn't go up spending quickly enough to match their increased real income and were running a substantial current account excess in 1975 and 1976.
Q. If trade were to open up between R and P, where could the world terms of trade locate in the figure above (somewhere on the PC/PF axis)? Could relative wages (w/r) in the two c
what is net barter terms of trade and the effect on its economy
Q. Use the II - XX framework in order to show graphically how inflation can be imported from abroad unless exchange rates are adjusted. Answer: Suppose that the home economy is
Q. Explain how an increase in government spending would affect the DD-AA schedule in the short run. Answer: A raise in government spending will raise aggregate demand, which wi
Q. Discuss the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighboring European countries. Answer: Germany rumbles high interest
Development through stabilisation and reform can be understood as follows The reasoning here was that the trade and resource transfer could not, by themselves, lift L
explain the product cycle theory in international trade
Q. Discuss the differences between Absolute PPP and Relative PPP. Answer: Absolute Purchasing Power Parity (PPP) states that the exchange rate between two currencies e
Lot of
Q. Imagine a world with two large countries, Home and Foreign. Evaluate how Home's macroeconomic policies affect Foreign. Compare the small and the large country cases; consider
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