Section A
Q1. Answer the following questions in about 100 words each :
(a) What is the real cash balance effect?
(b) Which policy will be effective if the IS curve is vertical?
(c) Illustrate, with a suitable example, how call options can be used for the purpose of speculation.
(d) Explain the difference between the concepts of convergence and conditional convergence.
(e) Explain the multiple exchange rate system and the advantages associated with it.
(f) Explain how transfer pricing is generally used by a multinational corporation as a method of increasing profit.