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International trade and finance

  1. Some macroeconomists believe that Long-Run Aggregate Supply (LRAS) is perfectly inelastic.
  2. Explain why they would believe so in 3-4 sentences.
  3. If LRAS is perfectly inelastic, what are the implications for monetary policy? Explain in 2-3 sentences.
  4. If LRAS is perfectly inelastic, what are the implications for countries considering fixed exchange rates?

 
 
 
 
 
 

  1. On foreign aid to developing countries:
  2. What are the circumstances under which foreign aid can help a developing country? Explain your answer in 3-4 sentences.
  3. How can foreign aid harm a developing country? Explain in 3-4 sentences.
  4. What are the problems with sending money as foreign aid? Explain in 2-3 sentences.
  5. What are the problems with sending goods as foreign aid? Explain in 2-3 sentences.

 
 
 
 

  1. On international economic development:
  2. What do you believe is the key to international economic development, i.e. what is the root cause of sustainable economic growth in poor countries? (2-3 sentences)
  3. What do you believe are the necessary conditions for growth, i.e. what conditions MUST already exist for growth to occur? (2-3 sentences)
  4. How can the U.S. government best promote economic growth in the developing world? (3-4 sentences)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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