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How do currency speculators harm for Less Developed Countries?
Private capital inflows can be short term and speculative. Speculators shift funds in a Less Developed Countries at low exchange rates, notice the currency appreciate and in that case sell the currency primary at a profit. The resultant currency swings are very much destabilising for balance of payments (BoP) domestic prices.
Private capital inflows and subsequent flight both are a factor into current economic disruption experienced through Argentina.
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QUESTION 1 (a) Compare and contrast the main theories of a demand for money. (b) Specify a money demand function for a small island economy like Mauritius. QUESTION 2
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