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

Financial Account - Balance of Payments

  The Financial Account captures international fund flows due to i._____. ii. Briefly Explain? ... Read More

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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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