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Q. Based on the case study, answer the following question: Can currency boards make low-inflation policies credible?
Answer: Currency boards have the power to bring in anti-inflation credibility from the country to which the domestic currency is hook. Currency boards usually mayn't acquire government debt however it can discourage fiscal deficits leading to reduce a major cause of inflation and devaluation. In command for a currency board to be successful is by increasing the banking sector and that is able to get the government under pressure to abandon the currency board. Additionally if the markets anticipate that the government is leaving the currency board the country mayn't benefit from the potential of a currency board.
Q. Present the case against floating exchange rates. Answer: 1.The discipline obligatory on individual countries by a fixed rate would be lost. 2. Undermine specu
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
The Arguments for Flexible Exchange Rates
Q. Calculate the effects of the fall in the relative price of good 2 on the income of the specific factors capital and land. Answer: For the reason that good 2 uses land, a f
Assume the United States exports 1000 computers at a price of $3000 each and imports 15 UK autos at a price of 10000 pounds each. Assume that the dollar/pound exchange rate is $2 p
which book by adam smith explains the absolute advantage ?
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Q. It has been argued that economic dualism that typifies relatively less developed or poor countries, is a barrier to participation in the global village, and lessens the chances
In a day of production, firms in angola can produce 200 liters of oil or 10 kilograms of tungsten. Firms in Namibia can produce 160 liters of oil or 60 kilograms of tungsten. Which
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