Some macro doubts

[RajEco]

1. Fixed exchange rates do not allow a domestic economy to adjust to a fall in export due to a foreign recession.
a) True
b) False
c) Uncertain

2. If we start from balanced trade, and a devaluation causes a greater percentage increase in the value of exports than a percentage fall in the quantity of imports, the trade balance will always improve.
a) True
b) False
c) Uncertain

3. If a devaluation causes a greater percentage increase in the value of exports than a percentage fall in imports valued in domestic prices, the trade balance will always improve.
a) True
b) False
c) Uncertain

[vandita24x7]

1.b
2.b
3.a

vandita

On 16 Mar 2014 12:36, "RajEco [via Discussion forum]" <[hidden email]> wrote:

1. Fixed exchange rates do not allow a domestic economy to adjust to a fall in export due to a foreign recession.
a) True
b) False
c) Uncertain

2. If we start from balanced trade, and a devaluation causes a greater percentage increase in the value of exports than a percentage fall in the quantity of imports, the trade balance will always improve.
a) True
b) False
c) Uncertain

3. If a devaluation causes a greater percentage increase in the value of exports than a percentage fall in imports valued in domestic prices, the trade balance will always improve.
a) True
b) False
c) Uncertain

---

If you reply to this email, your message will be added to the discussion below:

http://discussion-forum.2150183.n2.nabble.com/Some-macro-doubts-tp7585257.html

To start a new topic under General Discussions, email [hidden email]
To unsubscribe from Discussion forum, click here.
NAML

[RajEco]

@vandita..
thanks for the answers.

Can you briefly explain all the three ?

it would be great help.

[vandita24x7]

1. With fixed exchange rates, money supply must be contracted

to maintain the interest rate at the international level importing

the whole of the international recession into the country. However,

government spending can compensate any fall in exports without

any change in money supply.

2. The difference between the two must also be larger than the

percentage change in the real exchange rate.

3. This is what is stated by the Marshall-Lerner Condition.

On Sun, Mar 23, 2014 at 9:49 PM, RajEco [via Discussion forum] <[hidden email]> wrote:

@vandita..
thanks for the answers.

Can you briefly explain all the three ?

it would be great help.

---

If you reply to this email, your message will be added to the discussion below:

http://discussion-forum.2150183.n2.nabble.com/Some-macro-doubts-tp7585257p7585394.html

To start a new topic under General Discussions, email [hidden email]
To unsubscribe from Discussion forum, click here.
NAML

[RajEco]

thanks a lot :)