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Q. Why is it useful to make a distinction between debt and equity instruments?
Answer: Debt instruments such as bank deposits and bonds are repaid regardless of economic circumstances. Equity instruments for example a share of stock have a payoff that is linked to economic performances. Though remember the possibility of bankruptcy and the real return which is subject to domestic currency fluctuations.
Welfare Effects of Tariff can be understood as follows: It is important to understand what the welfare effects for the tariff are. While a tariff might seem desirable because i
Q. What is the national income identity for a closed economy? Answer: Y = C + I + G.
Explain how the money markets of two countries are linked through the foreign exchange market. Answer: The financial policy actions by the Fed affect the U.S. interest rate al
Q. Explain why under the gold standard a perpetual surplus or a perpetual deficit is impossible. Answer: Since specie inflows drive up domestic prices and restore symmetry in
Q. Why is the H.O. model called the factor-proportion theory? Answer: The H.O. model survey the limitations and the nature of presumptuous that the sole determinant of compar
Vernon's product cycle theory
What does the factor proportions theory posits
Q. What do you mean by Public Expenditure? The central governments have the responsibility of implementing various developmental programmes and bring about economic and social
Q. Explain why large interest rate differences would be strong evidence of unrealized gains from trade. Answer: The difference between offshore and onshore interest rates on
Q. Even though it is very clear in the context of the Specific Factors model that an expansion of international trade will make losers as well as winners, economists still claim t
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