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Q. What are the three main reasons why governments sometimes chose to devalue their currencies?
Answer:
1. Permit the government to fight domestic unemployment despite the lack of effective monetary policy.
2. Get better the current account.
3. Raise foreign reserves held by the central bank.
Q. What is the theory of Second Best? Answer: The principal of the second best notify us that when an economy suffers from multiple distortions the removal of only a few
Explain the complexities in the annalysis of balance of payment equilibrium
The Concept of Comparative Advantage is explained below: To illustrate the concept of the comparative advantage, we take the instance of two equi-sized equi-endowment countries
Q. Explain why despite enormous natural resources, much of Latin America's population remains in poverty and the region has been repeatedly experiencing financial crises. Answe
Q. Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD and where both the output and asset markets are out of equilibrium. Explain what will h
What is the significance of the observations made by OECD in this case study regarding “The OECD economies are more strongly dependent on the production, distribution and use of kn
Q. Explain how Brazil was able to reduce the rate of inflation from 2,669 percent in 1994 to less than 10 percent in 1997? Answer: By initiating a new currency and init
WHY IS INTERNATIONAL TRADE IMPORTANT FOR SOUTH AFRICA
What constitutes the basis for trade? What are the gains from trade in terms of production and consumption? Use theories and examples from a country of your choice.
explain the newo clacical theory of international trede
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