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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
Q. 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
#question.explain me Hecksher OHLIN theory of international trade in simple english
Q. "Although the price levels appear to display short-run stickiness in many countries, a change in the money supply creates immediate demand and cost pressures that eventually lea
Q . Consider that the relative capital abundance of Australia was so much greater than that of Sri-Lanka, that we would have to locate Australia far to the right on the K/L axis.
Q. What is the theory of Second Best? Answer: The principal of the second best notify us that when an economy suffers from multiple distortions the removal of only a few
What constitutes the basis for trade? What are the gains from trade in terms of production and consumption? Use theories and examples from a country of your choice.
Critically evaluate the theory and outline the necessary assumptions for the theory to hold in it''s purest form
Q. Discuss studies based on the interest parity conditions. Answer: Generally the formula doesn't hold and isn't a good predictor of future devaluations. Even poorer it
Q. In autarky, Country P was producing at point 5. With trade, could its production point be found above or below point 5? Explain why. What must happen in the K/L intensity ratio
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