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Q. Explain why the EMS countries decided to fix their exchange rates against the German DM?
Answer: In this manner the other EMS countries in effect imported the credibility of the German central bank in fighting inflation therefore discouraging the development of inflationary pressures at home.
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Q. A naïve implication of the DD - AA framework is that either fiscal or monetary policy can lead to full employment. Discuss why this view is naïve. Answer: 1. Inflation m
Q. The figure below shows the demand and cost functions facing a Brazilian Steel producing monopolist. If it were unable to export, and was constrained by its domestic market, wh
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Q. Explain why one can write the demand for money as follows: Md = P L (R, Y) Answer: The collective money demand is proportional to the price level. Imagine that every prices
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