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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.
is the stolper samulson theorem is relevant in these days
The Russian financial crisis
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Q. In recent cases, the U.S. placed quotas or protectionist tariffs on imported microchips and imported steel. In both cases the damage to "downstream" industries was obvious to
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Explain why Relative PPP is useful when comparing countries that base their price levels on different product baskets. Answer: For instance If the U.S price level increase by
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