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Q. Based on the case study, answer the following question: Can currency boards make fixed exchange rates credible?
Answer: No for the reason that is prohibited by law from acquiring any domestic assets thus all the currency it issues automatically is fully backed by foreign reserves. as well countries that adopt currency board do it for the reason that one of the mayor advantage aside from the constrain it places on fiscal policy central bank is able to never run out of foreign exchange reserves in the face of a speculative attack on the exchange rate. Thus the currency board cannot fix exchange rates.
Explain about constant,increasing and decreasing opportunity cost
Q. Explain why price levels are lower in poorer countries. Answer: One theory explicate the difference in prices on different endowments of capital and employment Bhagw
Q. An export subsidy has the reverse effect on terms of trade to the effect of an import tariff. Domestically a tariff will raise the price of the import good, deteriorating the
Q. Write an essay on the importance of a sound banking system in developing countries. Answer: Students must describe the phenomena of moral hazard as a part of their answer,
Q. What will be the effects of an increase in the money supply on the interest rate? Answer: An enhance in the money supply will origins the interest rate to decrease. This m
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
Q. Discuss the main factors affecting the position of the AA schedule. Answer: Revolutionize in the domestic money supply changes in the domestic price level changes in
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. What are the three types of transactions between the residents of different countries? Answer: 1. Trades of services and goods for goods or services. 2
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.
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