Explain why the exchange rate model, International Economics

Assignment Help:

Q. 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 that it doesn't allow for price rigidities. It assumes that prices are able to adjust right away to maintain full employment as well as PPP.


Related Discussions:- Explain why the exchange rate model

How much steel will the monopolist sell, Q . Now the monopolist discovers ...

Q . Now the monopolist discovers that it will export as much as it likes of its steel at the world price of $5/ton. It will thus expand for- export production up to the point whe

What quantity could it sell at what price, Q. The figure below shows the d...

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

Extensive import-substitution industrialization, Q. The United States, as ...

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

Explain purchasing power parity, Q. Explain Purchasing Power Parity...

Q. Explain Purchasing Power Parity. Answer: PPP () states that the exchange rate between two countries' currencies equals the ratio of the countries' price levels.

What factors lie behind capital inflows to developing world, Q. Wha...

Q. What factors lie behind capital inflows to the developing world? Answer: Several developing countries have received a lot of capital inflows that lead them to an

Monopolistic Competition, Suppose that industry 1 is monopolistically compe...

Suppose that industry 1 is monopolistically competitive, with a CES sub-utility function: U(c1,c2 ) = c1? + c?2 , 0 We let the marginal costs be denoted by c1(w,r), and the fixe

Explain critical appraisal of chamberlins theory, Q. Explain Critical Appra...

Q. Explain Critical Appraisal of Chamberlins theory? a. Chamberlin assumed that monopolist competitors act independently and their price manicuring goes unnoticed by the rival

What are the main weaknesses of the east asian economies, Q. Based on the 1...

Q. Based on the 1997 Crisis and your own experience, what are the main weaknesses of the East Asian economies? Answer: The limitation is little productivity increases most of

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd