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Basic textbook models, such as the Mundell-Fleming model, say that capital inflow happens due to the domestic interest rate being higher than the world interest rate, and therefore capital inflow. So according to this model, it can lower interest rates so that interest rates stabilize to the world interest rate. Though, there is a checklist that requires to be ticked off and this checklist is like a chain, for example if domestic interest rates are high then there is going to be capital inflow, the domestic money will appreciate due to the enhance in demand for the currency, therefore Net Exports will decrease until exchange rates have stabilized.
The Current Account This records all transactions involving the exchange of currently produced goods and services and is subdivided into i. Visibles: A record
Direct Action Direct action in more than one from has been employed by the central banks either as an alternative to their discount rate policy or open market operations or tog
all theory
No new substitutes for the commodity If some new substitutes for a commodity appear in the market, its demand normally declines. This is quite natural, since with the availabil
KEYNESIAN AND NEW-KEYNESIAN THEORIES OF UNEMPLOYMENT AND THE BEHAVIOUR OF REAL WAGES As mentioned above, two phenomena about the labour market need to be explained:
Features of Monoploy in Monopolistic Competition Monopolistic competition has the following features from monopoly : As the products are differentiated substitutes, each b
How does economic theory contribute to managerial decisions?
THE STRUCTURE OF POPULATION AND SUPPLY OF LABOUR The structure (also called age distribution or composition) of population, or the number of people in the different age groups
Apprehensions about the future price of law of demand When consumers anticipate a constant rise in the price of a long-lasting commodity, they buy more of it despite the price
Resource allocation in a free enterprise Although there are no central committees organising the allocation of resources, there is supposed to be no chaos but order. The major
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