Question: Explain the following: a. Using a diagram carefully explain the economic cost of tariffs. b. What are the components of capital accounts? Explain what are

Explain the following: a. Using a diagram carefully explain the economic cost of tariffs. b. What are the components of capital accounts? Explain what are considered to be a credit item in capital account? c. Using diagrams carefully explain how the foreign exchange rate is determined under flexible exchange rate system. What happens to the value of SC if interest rates on short-term bonds increase abroad. assuming that it stays the same at home (other things being equal)

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