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Q. Why is the H.O. model called the factor-proportion theory?
Answer: The H.O. model survey the limitations and the nature of presumptuous that the sole determinant of comparative advantage is inter-country differences in (relative) factor proportions.
Q. Explain the phenomenon of capital flight. Answer: The reserve defeat accompanying a devaluation scare is habitually labeled capital flight for the reason that the assoc
Q. What is the policy of sterilization? Give an example. Answer: • Untainted foreign exchange intervention - policy by which central banks perform equal foreign
diagram
Q. Explain how the German Bundesbank gained its low-inflation reputation. Answer: Essentially Germany's experience with hyperinflation in the 1920s and yet again aft
Q. Explain the Law of One Price. Give an example. Answer: The law of one price affirms that in competitive markets free of transportation costs and trade barriers ide
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
Q. Presumably, since the United States is a large country in many of its international markets, a positive optimum tariff exists for this country. It follows thus that when any l
Revisions of Conventional Trade Theory
Q. How did countries use their policy tools to regain internal and external balance after the first oil shock of 1973? Answer: Seeing that the recession deepened over 1974 an
Q. Explain what a "vehicle currency" is. Why is the U.S. dollar considered a vehicle currency? Answer: A vehicle currency is one specifically widely used to denominate inter
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