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Q. Discuss the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighboring European countries.
Answer: Germany rumbles high interest rates to fight inflation. Other European countries Italy, France and UK in recession trying to match the High German interest rates to hold their currencies fixed against Germany's thus pushing their economies into deep recession. Other European countries struggle to continue the fixed exchange rate in order not to lose the trustworthiness they had built up since 1985. The policy divergence between Germany and the other European countries led to a series of fierce speculative attacks on the EMS exchange parities starting in September 1992. By August 1993 the EMS was compulsory to retreat to very wide (+- 10 percent) bands which were kept in compel until the introduction of the euro in 1993.
Q. Explain the credibility theory of the EMS. Answer: In this approach the other EMS countries in effect imported the credibility of the German central bank in fightin
Q. Why is it that North-South trade in manufactures look to be consistent with the results or expectations generated by the factor-proportions theory of international trade, where
definitions;types
haberler''s opportunity cost theory
Q. What has been learned since 1973 with regard to the experience with floating exchange rate regime? Answer: 1. Monetary policy autonomy: Yes though floating rate didn
the New Trade Agenda
Q. Neoclassical and Classical trade theory makes the case that free trade can bring a country to an optimum and economically efficient use of its resources; and therefore is an op
Question 1 A local manufacturer of work gloves and gardening gloves has been enjoying moderate success in its local markets with a physical sales team. The president is convin
Q. If the central bank does not purchase foreign assets when output increases but instead holds the money stock constant, can it still keep the exchange rate fixed at E 0 ? An
Q. Write about the assumptions of the theory of consumer behavior based on the cardinal utility approach. 1. Rationality- It is assumed that the consumer is a rational being in
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