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Q. What are the predictions of the PPP theory with regard to the real exchange rates?
Answer: The real exchange rate among two countries is a broad summary measure of the prices of one country's goods and services relative to the other's. PPP predicts that the actual exchange rate never permanently changes which is different from nominal exchange rates that deal with the relative price of two currencies
Assume the United States exports 1000 computers at a price of $3000 each and imports 15 UK autos at a price of 10000 pounds each. Assume that the dollar/pound exchange rate is $2 p
Q. Why do governments prefer to avoid current account deficits that are too large? Answer: A current account debit may possibly pose no problem if the borrowed funds
Q. Using a figure illustrate the simultaneous equilibrium of the foreign exchange and domestic money markets when the exchange rate is fixed at E0 and is expected to remain fixed a
difference between differencial treatment in reverse andspecial and differencial treatment
Q. Explain the following figure: Answer : The figure explicate how the money markets of two countries are linked through the foreign exchange market. The financial pol
Q. It is argued that import substitution is a misguided trade policy if the intent is to show long-term economic growth. Illustrate the reasons underlying this argument. Answe
conditions for trade unions to claim for higher wages
can Lesotho afford an independent monetary policy
Q. Using the GG - LL framework, analyze the effect of Libya subsidizing the Pakistani Nuclear programs. Answer: This will move the GG curve upward and to the left causi
Q. Explain the following figure: Answer: The figure depict the effect of a permanent increase in the money supply starting from full employment equilibrium. Subsequent to the i
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