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Determine the term - hot money
A large 'hot money' inflow shifts the demand curve for currency to the right, leading to exchange rate rising and to an overvalued exchange rate in terms of trading competitiveness of the country's exports. The current account of balance of payments is then about to deteriorate. If there is a shortage to start with, the deficit will grow larger. A large 'hot money' outflow will lead to opposite result.
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Half the members of a fishing tribe catch four fish per day and half catch 10 fish per day. A group of 10 members could build a boat for another tribe in one day and receive a paym
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