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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.
Q. Suppose Australia, a land (K)-abundant country and Sri-Lanka, a labor(L)- abundant country both produce labor and land intensive goods with the similar technology. Following t
Q. It is probable that trade based on external scale economies can leave a country worse off than it could have been without trade. Illustrate how this could happen. Answer:
Road,railway,air and shlping transportation
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Q. "It is in the interest of each depositor to withdraw her money from a bank if all other depositors are doing the same, even when the bank's assets are sound." Discuss. As par
what is net barter terms of trade and the effect on its economy
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breadtalk
Brifly explaine the alternative explanation to the theory of international trade
Q. Discuss the values of private saving in closed and open economies. Answer: In the closed economy private saving Sp is equal to I + (G - T) and in an open economy private sav
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