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Unformatted text preview: holdings of foreign currency Fixed interest rates? Does not have power over creation of money Nominal exchange rate is fixed, price adjustments must be reflected in domestic prices Some price stickiness, so not exactly perfect MFA multilateral fiber arrangement Bilateral quotas for apparel Graph: supply and demand curve with quota Auctioned off the quotas Entire quota rent ends up as government revenue As HK developed, wages rose Then 1978-79 China began reforms Actual production activities that used to happen in HK moves into Southern China Today, not much manufacturing activity in HK anymore Social problem, outsourced millions of jobs to China HK acts as headquarters Big problem is pollution from China...
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- Spring '08