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Q. Using the II - XX framework, show using a figure that fiscal policies by themselves cannot bring the economy to both internal and external balances.
Answer: Starting at point 2 monetary policy is revealed as only horizontal movements. This signifies that the economy is able to reach either point 3 internal balance or point 4 external balance in the figure however not both internal and external balances. Only a depreciation of the currency accompanied with an increase in fiscal ease explicitly increasing government expenditures or decreasing taxes will move the economy to both internal and external balances at point 1 in the figure.
Q. Why Study Fixed Exchange Rates? Answer: Four main reasons: • Managed Floating - Current monetary system is hybrid of floating rate and pure fixed systems fix
(a) Consider there are two countries (country 1 and country 2) with two goods (X and Y). Further, under the assumptions of the Ricardian model, country 1 specialise in goods X. De
different between her barter terms of trade and net barter terms of trade
Strategic groups "Strategic groups are organizations within an industry with similar strategic characteristics, following similar strategies or competing on similar bas
Q. How A Central Bank Fixes the Exchange Rate? Answer: The Central bank should always be willing to trade currencies at the fixed exchange rate with the private actors in the f
Q. In recent cases, the U.S. placed quotas or protectionist tariffs on imported microchips and imported steel. In both cases the damage to "downstream" industries was obvious to
Describe International Trade Theory?
draw diagram of price leadership model
Q. Why did the EU countries move away from the EMS toward the goal of a single shared currency? Answer: 1. To produce a superior degree of European market integratio
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
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