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Q. Show the effects of the reunification of eastern and western Germany in 1990 on both Germany and its neighbouring European countries using the AA - DD framework.
Answer: For Germany this was a period of rumble with high interest rates to fight inflation. Erstwhile European countries like Italy UK, and France were 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 strive to continue the fixed exchange rate in order not to lose the credibility they had built up since 1985. The policy clash among Germany and the other European countries led to a series of fierce speculative harass on the EMS exchange parities starting in September 1992. By August 1993 the EMS was forced to move away to very wide (+- 10 percent) bands which was kept in force until the introduction of the euro in 1993.
Q. Other things being equal, a rise in a country's terms of trade enhances its welfare. What could happen if we relax the ceteris paribus assumption, and allow for the law of dema
why is international trade important for south africa
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WHY IS INTERNATIONAL TRADE IMPORTANT FOR SOUTH AFRICA
Q. Explain how the German Bundesbank gained its low-inflation reputation. Answer: Essentially Germany's experience with hyperinflation in the 1920s and yet again aft
Hepburn’s Speed Model, the coefficients of vehicles are indicated for C and D. As the chief of operations in your organization, you are responsible for presenting the yearly budget
Q. What are the main factors determining the aggregate money demand? Answer: Three major factors: the price level, interest rate and real national income. A increase i
By Using the figure describing both the U.S. money market and The foreign exchange market, analyze the effects of an increase in the U.S. money supply on the dollar or euro exchang
Q. Imagine that the economy is at a point on the DD-AA schedule that is above both AA and DD and where both the output and asset markets are out of equilibrium. Explain what will h
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