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Q. What is the interest parity condition?
Answer: The circumstance that the expected returns on deposits of any two currencies are equal when measured in the same currency is called the interest parity condition. It involve that potential holders of foreign currency deposits view them as equally desirable assets that is risk is assumed away. In the notational forms:
R$ = RE + (Ee $/E - E$/E) / E$/E.
In as much as Sovereign Wealth Funds (SWFs) are established to achieve national objectives, the intentions of the United Arab Emirates -- one of the world's largest -- are open to
difference between classical and neo classical theory of international trade.
Q. Even though it is very clear in the context of the Specific Factors model that an expansion of international trade will make losers as well as winners, economists still claim t
Q. Explain why East Asian countries have done so well relative to South American countries. Answer: Generally the reasons are less moral hazard less government debt to forei
Q. Explain why even owners of capital that cannot be moved can avoid more of the economic stability loss due to fixed exchange rates when Norway's economy is open to capital flows
what are the limitations of net barter terms of trade
Q. Why is it that an industry is performing under conditions of domestic internal scale economies (applies to firm in the country) - then the resultant equilibrium can't be consis
Explain Purchasing Power Parity. Answer: PPP ( ) states that the exchange rate between two countries' currencies equals the ratio of the countries' price levels. A decr
Q.. "A good cannot be both land- and labor-intensive." Discuss. Answer: In a two good or two factor models for instance the original Heckscher-Ohlin framework and the factor
Q. Why do we observe the Leontief paradox? Answer: There are several possible answers that they may be categorized into three groups. One would argue that the theory or model
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