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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 are channeled into productive domestic investment projects that pay for themselves with the revenue they generate in the future. Though sometimes large current account deficits represent temporarily high consumption resulting from misguided government policies or some other malfunctioning of the economy occasionally the investment projects that draw on foreign funds may be badly planned and so on. In such cases the government strength wish to reduce the current account deficit immediately rather than face problems in repaying its foreign debt in the future.
Why Adam Smith theory cannot be applicable?
Q. It is claimed that the persistence of protectionism is often the result of the fact that those who lose from trade are usually a much more informed, cohesive and motivated a gr
Q. In Foreign and Home there are two factors of production, land and labor, used to produce only one good. The land supply in each country and the technology of production are ex
Q. Use a figure to study the effects of a change in market belief with regard to the fixed exchange rate, in particular assume market participants expect the government to devaluat
To answer the following question, please refer to the figure below. Concentrating only at the lower right quadrant, discuss the effects of a change in U.S. expected inflation.
Q. Discuss the different types of Letters of credit? Types: i. Revocable Letter of credit ii. Irrevocable Letter of credit iii. Deferred payment Letter of credit iv. Confirmed
Opportunity cost theory
Q. Suppose Albania is exporting product B, and experienced economic growth biased in favor of product B as seen in the Figure above. We are also told that Albania's new consumptio
Q. How did the European single currency evolve? Answer: The answer is related to the crumple of Bretton Woods and the European Currency reform of 1969-1978. The Werner
Q. Countries that are willing to tolerate an unusually high quantity of pollution relative to their supplies of other factors would leads to export "pollution-intensive" goods. D
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