Managerial Economics is the economics for managers, which helps managers to make rational business decisions using economic theories and tools under the given resources and situation of risk and uncertainty. The managers have to make…
The BoP Theory of Exchange Rate Determination is a modern theory for exchange rate determination. BoP Deficit = appreciation of forex, i.e., exchange rate of forex↑ BoP surplus = depreciation of forex, i.e., exchange rate…
According to this theory, the exchange rate between the currencies of any two countries is calculated by comparing their purchasing power in their local market. It is assumed that each currency has some purchasing power…
It is also called Factor Proportions Theory, or Heckscher–Ohlin Theory. It was developed by Swedish economists Eli Heckscher and Bertil Ohlin in the early 20th century. It is a modern theory that argues the basis…
Elasticity Approach to BoP (Price Effect or Micro Effect) Devaluation & Revaluation – by policy adjustment by the government Depreciation & Appreciation – by market adjustment हामी संग १०० भारु = १६० नेरु छ। यदि…
Causes of BoP Deficit (BoP Disequilibrium) The BoP deficit or Balance of Payment Disequilibrium occurs due to various factors, which may be economic or non-economic. In some cases, the economic factor may be dominant, while…
The effectiveness of fiscal and monetary policy depends upon the exchange rate system of the economy. If the exchange rate system is fixed, then monetary policy is ineffective; however, for a flexible exchange rate system,…
What is Dumping? Dumping is a practice of selling the product at a lower price in the foreign market than in the domestic market. So, it is a type of third-degree price discrimination where the…
What is Factor Pricing? Factor Pricing refers to the determination of the reward or payment given to the factors of production (land, labor, capital, and entrepreneurship) for their contribution to the production process. Suppose a…