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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.
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Explain why the exchange rate model based on PPP is a long-run theory. Answer: PPP theory is a financial approach to the exchange rate. It is a long-run theory for the reason
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What can explain the failure of relative PPP to hold in reality? Answer: Government procedures of the price level differ from country to country. One cause for these differe
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Q. "A monetary policy is not a policy tool under fixed exchange rates." Discuss. Answer: It is True Under fixed exchange rates domestic asset transactions by the centr
Q . Is it possible that if positive scale economies characterize an industry, that its equilibrium can be consistent with purely competitive conditions? Explain how this would hap
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