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Q. Explain why the distinction between debt and equity finance is useful in analyzing the response of developing countries to unforeseen events such as recession or terms of trade change?
Answer: While a country's liabilities are in the form of debt it's fixed scheduled payments to creditors don't fall when its real income falls. This makes it complicated to honour the developing country's foreign obligation and may lead to default.
The Arguments for Flexible Exchange Rates
ln?(?FDI?_t )=ln??(C)+? ln?(?CNGDP?_t )+ßln?(?GDP?_t ?)+a ln?(DIST)+fCAFTA+?_(1 ) ln?(?EXPORT?_t )+?_2 ln?(?GDPM?_t )+?_3 ln?(?CPI?_t )+?_4 ln?(?GDPA?_t )+e
Q. The United States, as it began its long and unbeaten growth in the early 19th Century, consciously promoted domestic production through such activities as tariffs, Clay's Ameri
Q. At the conclusion of World War I, Germany, as a punishment, was obliged to take a large transfer to France in the form of reparations. Is it possible that the actual reparation
#question.suppose that France has a trade surplus with the United Kingdom. What would you expect to happen to price, wages, and commodity price in France? why? What would happen to
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Explain why the exchange rate model based on PPP is a long-run theory. Answer: PPP theory is a financial approach to the exchange rate. It is a long-run theory for the reason
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Q. Discuss the values of private saving in closed and open economies. Answer: In the closed economy private saving Sp is equal to I + (G - T) and in an open economy private sav
Q. The Specific Factors model makes a distinction between general-purpose factors that can move between sectors and factors that are specific to particular uses. How do difference
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