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Q. Explain how an increase in the real exchange rate affects exports and imports. Answer: While the real exchange rate rises domestic products are cheaper relative to
Q. How A Central Bank Fixes the Exchange Rate? Answer: The Central bank should always be willing to trade currencies at the fixed exchange rate with the private actors in the f
HOW TERMS OF TRADE IS DETERMINED
Q. In 1986, the price of oil on world markets dropped sharply. Since the United States is an oil-importing country, this was widely regarded as good for the U.S. economy. Yet in
the year of alternative / new trade theoriess
Q. Albania refused to engage in international trade for ideological reasons. To maximize its economic welfare it could choose to produce at which point in the diagram above? Sup
Q. Why do governments prefer to avoid excessive current account surpluses? Or, why are growing domestic claims to foreign wealth ever a problem? Answer: On behalf of a given l
2. If a country's growth is biased in favor of its import, this should unequivocally improve its terms of trade and its economic welfare. Discuss. Answer: Suppose the Japan
is the stolper samulson theorem is relevant in these days
Q. It can be argued that Japan's explicit promotion of its microchip industry was an excellent paradigm of successful industrial policy. What criteria could you apply to calculat
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