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Q. How can long-run values in the real exchange rate change?
Answer: A elevate in world relative demand for U.S output origins a long-run real appreciation of the dollar against the euro a fall in the real dollar/euro exchange rate.
A proportional expansion of U.S output causes a long-run real depreciation of the dollar against the euro (a rise in the real dollar/euro exchange rate).
Q. Explain the purpose of the given figure? Answer: To demonstrate that spot and forward exchange rates are in general close to each other.
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Q. Explain the difficulties in naming the new European currency. Answer: Amongst the reasons: Maintenance the name ECU would be misleading the ECU depreciated sharply ag
Q. How did the international monetary system created at Bretton Woods in 1944 allow its members to reconcile their external commitments with their internal goals of full employment
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Critical evaluation of Adam Smith''s Theory. Outline of its purest form. What is its critism?
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Is a depreciation of the dollar/euro exchange rate correlated with a decrease in the dollar return on U.S. deposits? Answer: No, suppose that the Interest Parity is maintained
Q. Explain why in exchange rate-based stabilization plan may result in a real appreciation? Answer: annotation 8 gives three reasons: first, persistent inflation because of s
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