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Q. "Although the price levels appear to display short-run stickiness in many countries, a change in the money supply creates immediate demand and cost pressures that eventually lead to future increase in the price level." Discuss.
Answer: The statement is true that the pressures come from three major sources that are excess demand for output and labor and inflationary expectations and raw material prices.
explain the product cycle theory in international trade
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To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation.
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