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Q. How much trade do currency unions create?
Answer: The major result is that currency unions promote trade. One study originate that on average two countries that are members of the same currency union trade three times as much with each other as countries that don't share a currency. Even if the euro were to increase trade within the euro zone by 50 percent the positive effect on people's welfare could be immense as another study has shown. Though some challenge the conclusion. Several claims the results wouldn't be duplicated when applied to large countries such as the members of the EU one more study found out that leaving a common currency area as Ireland did has not initiates a reduction in UK - Ireland trade.
Q . Use the following table to demonstrate the significance of macroeconomic policy coordination. Demonstrate that the two governments would have been happier if the two of them h
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Explain why Relative PPP is useful when comparing countries that base their price levels on different product baskets. Answer: For instance If the U.S price level increase by
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Q. What are the factors affecting the demand for foreign currency? Answer: Three factors that affect the demand for foreign currency are risk, expected return, and liquidity.
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