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Q. Discuss the problems that the EMU will face in the coming years.
Answer: Europe isn't an optimum currency area so asymmetric economic developments within different countries of the euro zone that call for different interest rates can't be implemented. The political part of the confederacy is much weaker and may limit the political legitimacy of the economic unification. On the one hand labour markets stay remains highly unionized and subject to high government unemployment taxes and other regulations impeding labour mobility. On the other side capital has high inducement to migrate to the EMU countries with the lowest wages. Constraints on national monetary policy are likely to be painful due to the nonexistence of substantial fiscal federalism fiscal transfer of resources from the rich to the less rich countries within the European Union. The EU is considering a major expansion of its membership into Eastern Europe and the Mediterranean. This will cause several coordination costs and as well the issue of representation of small and big countries.
Postwar trade theory
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Q. What will be the effects of an increase in the money supply on the interest rate? Answer: An enhance in the money supply will origins the interest rate to decrease. This m
Q . While selling exports it could also maximize its domestic sales by equating its marginal (opportunity) cost to its marginal revenue of $5. How much steel could the firm sell
Q. Explain the following figure: Answer: The figure depict the effect of a permanent increase in the money supply starting from full employment equilibrium. Subsequent to the i
Q. What are the factors affecting the demand for foreign currency? Answer: Three factors that affect the demand for foreign currency are risk, expected return, and liquidity.
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Q. How did the international monetary system influence macroeconomic policy-making and performance during the interwar period (1918 - 1939)? Answer: Governments efficiently sus
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