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Define the balance of payments problem in international capital flows.
Balance of payments (BoP): It inflows capital as like:
• Foreign direct investment (FDI) into machinery and plant. In the long term Gross Domestic Product rises but profits are sent back to investing country. The role of multi-national companies.
• Short term loans that can be withdrawn at short notice leading to abrupt balance of payments and exchange rate crisis as like Argentina in 2002.
Star Petroleum and Moonlight Petroleum are retail petrol stations that compete in the local market to sell petrol to consumers. Star and Moonlight are located across the street fro
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QUESTION (a) Explain the law of demand and the factors affecting demand. (b) Explain and illustrate how demand of a commodity will change if there is a tax on that product.
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