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Q. How were the initial members of EMU chosen? How will new members be admitted? What is the structure of the complex of financial and political institutions that govern economic policy in the euro zone?
Answer: EU countries must persuade:
a) Small inflation rate no more than 1.5 percent over the average of the three EU member states with the lowest inflation.
b) A steady exchange rate within the ERM.
c) Public-sector shortage no much high than 3 percent of its GDP in general.
d) A public debt less than or approaching a reference level of 60 percent of its GDP.
Q. How did countries use their policy tools to regain internal and external balance after the first oil shock of 1973? Answer: Seeing that the recession deepened over 1974 an
Revisions of Conventional Trade Theory
heberler''s theory of opportunity cost notes
Q. Explain the difference between the following two expressions: Y = C(Y d ) + I + G + CA(EP*/P, Y d ) and Y = C + I +G + CA Answer: The first expression corresponds to a
Q. Explain why East Asian countries have done so well relative to South American countries. Answer: Generally the reasons are less moral hazard less government debt to forei
Q. In autarky, Country P was producing at point 5. With trade, could its production point be found above or below point 5? Explain why. What must happen in the K/L intensity ratio
Q. Refute the claim by mercantilists who claimed that without severe restrictions on international trade and payments, a country might find itself impoverished and without an adequ
The international financial system
Question 1: The main challenge facing governments in the 21st century revolves around containing and/or downsizing of public spending. Explain why reduced government interventi
Q. 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
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