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Q. What is the Fisher Effect? Provide an example.
Answer: All moreover equal a rise in a country's expected inflation rate will ultimately cause an equal rise in the interest rate those deposits of its currency offer. Likewise a decrease in the expected inflation rate will eventually cause a fall in the interest rate.
For an example if the expected U.S inflation were to increase permanently from _ to (_ + ) current dollar interest rates R$ would eventually catch up to the higher inflation increasing by a value _R$ = in accordance with the financial Approach that in the long run purely monetary developments should have no effect on an economy's relative prices since the real rate of return on dollar assets would remain unchanged.
Revisions of Conventional Trade Theory
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Q. Countries do not in fact export the goods the H.O. theory predicts. Discuss. Answer: This statement isn't true that though one may find several cases where it seems to be
role of export import bank of india
Q. Discuss the main factors affecting the position of the DD schedule. Answer: The level of government taxes, demand, and investment and the domestic and foreign price
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Q. Suppose E is fixed at E 0 and that the asset markets are in equilibrium. Suddenly output rises. What monetary measures keep the current exchange rate constant given unchanged e
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