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Question 1:
(a) Explain the Law of One Price and discuss its limitation in explaining exchange rates.
(b) According to you, what factors determine exchange rates in the long run?
Question 2:
(a) Explain the keynesian and monetarist views of inflation?
(b) Explain why governments tend to pursue inflationary monetary policies?
Question 3:
Explain the different monetary measures that are available to the Central Bank, giving the advantages and disadvantages of each.
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