Economics

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Calculating Saving Rate of a Country using Harrod Domar Equation Macroeconomics Microeconomics

Positive Balance of Payment

  Question “Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments.” Briefly comment on this statement? ... Read More

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Freely Floating Currency

  For a freely floating currency, currency i._____ occurs when the market value of a country’s currency rises relative to the value of another country’s currency, while currency ii._____________________ occurs when the market value of a country’s currency declines relative to ... Read More

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Fixed or Managed Exchange Rate

Economics Question: A country with a fixed or managed exchange rate would consider i.___ its currency to gain competitive advantage vis-à-vis its trade partners. ii. Briefly Explain? ... Read More

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Exchange Rate and Domestic Inflation

Question: A county with a fixed or managed exchange rate would consider i.______ its currency if the country is worried about domestic inflation. ii. Briefly Explain? ... Read More

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Changes in currency supply and demand

  Question: Changes in currency supply and demand can be traced back to changes in fundamental supply and demand in foreign and domestic i._____markets and foreign and domestic ii.________ markets as well as to changes in currency speculators’ expectations vis-à-vis future relati ... Read More

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Determining the real exchange rate

Question: To determine the real exchange rate, what two pieces of information do you need in addition to the nominal exchange rate? ... Read More

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Trade deficit directly tied to the Net Foreign Investment

  Question: We know that National Savings is what’s left of National Income after Households Consume and the Government Spends (S = Y – C – G). And, we know that National Income equals GDP (Y = C + I + G + NX).  Therefore, it is easy to show that a country’s ... Read More

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Theory of Purchasing Power Parity

Question: The Theory of Purchasing Power Parity says that, in the long run, nominal exchange rates change to offset changes in relative i. _____so that the purchasing power of two currencies stays roughly at parity. ii. Briefly Explain? ... Read More

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Currency Valuation based on Purchasing Power Parity

Question:   In June 2005, a Big Mac sold for 6,000 pesos in Colombia and $3.00 in the United States.  The exchange rate in June 2005 was 2,300 pesos per US Dollar.  So, on Big Mac purchasing power parity grounds the Colombian peso was i. _________.ii. Briefly Explain? ... Read More

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Currency Pegging

Question: If a government pegs the value of its currency to another currency, the government must stand ready to i. _________________________ the “hard” currency to defend the pegged value of its own currency. ii. Briefly Explain? ... Read More

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Maintain a peg that undervalues a currency

Question: In the short-run, it is easier for a country to maintain a peg that undervalues a currency (relative to the equilibrium market rate) than it is to maintain a peg that overvalues the currency (relative to the equilibrium market rate). Explain Why?  ... Read More

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Stimulus package passed by the US Government in 2009

  Question: 1. Was the stimulus package passed in 2009 as success?  In answering this question the focus should be the articles on the syllabus, but you should also include opinions of other commentators.   Your answer should also describe why coming to a clear conclusion on thi ... Read More

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