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Q. Why Study Fixed Exchange Rates?
Answer: Four main reasons:
• Managed Floating - Current monetary system is hybrid of floating rate and pure fixed systems fixed exchange rates give insight to effects of foreign exchange intervention under floating rates.
• Regional Currency Arrangements - Exchange rate unions subsist where member nations fix mutual exchange rates.
• Developing Countries and Countries in Transition- Almost half the world connect in currency pegging.
• Lessons of Past - Fixed exchange rates were the standard in several historical periods many economists propose resurrection of some fixed rate system.
Q. Suppose Albania is exporting product B, and experienced economic growth biased in favor of product B as seen in the Figure above. We are also told that Albania's new consumptio
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. Imagine a world with two large countries, Home and Foreign. Evaluate how Home's macroeconomic policies affect Foreign. Compare the small and the large country cases; consider
Identify and explain the three basic economic question that the group of survivors will have to answer everyday
Detail about offer Curves
Q. Neoclassical and Classical trade theory makes the case that free trade can bring a country to an optimum and economically efficient use of its resources; and therefore is an op
What are the reasons behind the growing importance of services in trade ?
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
using diagrams, corden''s theory of customs union under conditions of oligopoly and within the existence of external economics of scale.
Discuss the effects of ongoing inflation based on the PPP theory. Answer: Other things equivalent money supply growth at a constant rate eventually results in ongoing price le
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