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Q. Describe the chain of events leading to exchange rate determination for the following cases: 1. An increase in the U.S money supply 2. An increase in the growth rate of the
Present and explain the Fundamental Equation of the Monetary Approach. Answer: Suppose E $ /E = P US /P E and that domestic price levels depend on domestic money demands and
Q. It is argued that the United States could be foolish to maintain a free-trade stance in a world in which all other countries exploit prisoner or child labor, or are protectioni
Explanation of haberler opportunity cost with diagrams
"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
Q. Explain why the oil price shocks after 1973 made countries unwilling to revive the Bretton Woods system of fixed exchange rates. Answer: Using the GG - LL framework
Q. Suppose the relative price of good 1 falls relative to the price of. What happens to the wage rate? Answer: The labour component of the price of 1 is bigger than that of p
Q. In Foreign and Home there are two factors of production, land and labor, used to produce only one good. The land supply in each country and the technology of production are ex
New threats to an open trading system
What is the role of foreign trade in an economic development of a country
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