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Q. Explain why the European Union's current combination of rapid capital migration with limited labor migration may actually raise the cost of adjusting to product market shocks without exchange rate change.
Answer: If the Netherlands undergo an unfavourable shift in output demand Dutch capital is able to flee abroad leaving even more unemployed Dutch workers behind than in the case of government regulations that were to hinder the movement of capital outside the Netherlands. Harsh and persistent regional depressions could result worsened by the probability that the relatively few workers who did successfully emigrate would be precisely those who are most reliable, skilled, and enterprising. This is another instance of the theory of the second best.
oppotunity cost theory of international trade.Explanation of the theory
explained with example
Q . While selling exports it could also maximize its domestic sales by equating its marginal (opportunity) cost to its marginal revenue of $5. How much steel could the firm sell
Q. Suppose Airbus is set to give the aircraft before Boeing. Which company will enter the market? Answer: Boeing will not and Airbus will produce.
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Q. Why would you suggest to a government to use a floating exchange-rate regime? Answer: Floating Exchange Rate is an exchange rate in which central banks don't inter
What is the Postwar International Monetary system
Globalization The procedure of interlinking financial markets in various countries into a common, world pool of funds to be accessed by both between borrowers and lenders. It
Q. It has been claimed that the Chinese burst of modernization which has been propelling its manufactured exports throughout the world at an unprecedented rate, is made possible b
essay should be based on one of the problems mentioned into Haberler (1950) with references to the main assumptions of the general equilibrium analysis
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