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Q. Using a figure, show that under full employment, a temporary fiscal expansion would increase output (over-employment) but cannot increase output in the long run.
Answer: A temporarily monetary expansion will move the economy from DD1 to DD2 and output increases. A permanent financial expansion will as well shift the AA curve to the left and down. The small exchange rate appreciates that is E decreases.
curve
Q. Explain why price levels are lower in poorer countries. Answer: One theory explicate the difference in prices on different endowments of capital and employment Bhagw
what is was the weakest model
1.concepts of terms of trade,factors affecting terms of trade. 2.gross & net barter terms of trade. 3.terms of trade & economic development
Q. Given the opportunity to sell at world prices, the marginal (opportunity) cost of selling a ton domestically is what? Answer: $5/ton.
1. International trade: (a) Explain the concept of comparative advantage between two countries (use a numerical example to illustrate, and do not use the identical example in th
Q. If the central bank does not purchase foreign assets when output increases but instead holds the money stock constant, can it still keep the exchange rate fixed at E 0 ? An
Q. Write about the assumptions of the theory of consumer behavior based on the cardinal utility approach. 1. Rationality- It is assumed that the consumer is a rational being in
Critically evaluate the classical theory of international trade
Question: Tire Co Ltd, a Mauritian company, is engaged in the import and distribution of tyres from TZ Co Ltd established in Mozambique. Tire Co Ltd trades since 10 years under
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