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Q. What can one learn from the following figure?
Answer: The figure shows the U.S. current account as well as net foreign wealth from 1977 until 1996. It illustrate that a string of current account deficits in the 1980s reduced America's net foreign wealth until by the end 1996 the country had accumulated a substantial net foreign debt. In 1987 the country turns into a net debtor to foreigners for the first time since World War I.
Q. Explain the purpose of the following figure. Show the effects of German unification on Germany's interest rate. Answer: The major purpose is to show that different i
Q. What are the three main reasons why governments sometimes chose to devalue their currencies? Answer: 1. Permit the government to fight domestic unemployment despite the
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Q. Explain the effects of a permanent increase in the U.S. money supply in the short run and in the long run. Assume that the U.S. real national income is constant. A raise in
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