Economic P3 May 2010

Economic P3 May 2010 - Economic P3 May 2010 Three Questions...

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Economic P3 May 2010 Three Questions – Gaith Kalai Question 1:Already answered in previous homework Question 3 a. S i. The official value of a nation's monetary unit at a given date or over a given period of time, for example units of local currency per US dollar and as determined by international market forces ii. Foreign direct investment: the purchase of land, equipment or buildings or the construction of new equipment or buildings by a foreign company b. An increase in food imports would result in an increase in the supply of the currency on the world market, which would case the Pakistani rupee to fall. This action, which is one the factors that lead to currency depreciation. In other words, the value of Rupee will decrease because there is an increase in supply of rupees (which is what an increase in imports from Pakistan does). c. Continued increase in prices for imported raw materials would eventually impact the general price level and output by 2008. Represented in a standard AD/AS diagram (with AS
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Economic P3 May 2010 - Economic P3 May 2010 Three Questions...

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