Question
In a country with a USD peg and free capital mobility, why does a central bank rate cut create pressure on reserves?
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Answer
Lower rates trigger capital outflows, forcing reserve sales to defend the peg.
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Question
In CFA economics, why is uncovered interest parity often discussed with carry trades?
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Answer
Because UIP is frequently violated empirically.
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Question
How does geopolitical conflict in resource-rich regions affect commodity prices?
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Answer
Supply disruption can trigger energy and agricultural price spikes.
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Question
Why can two countries gain from trade even if one has absolute advantage in every good?
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Answer
Because gains depend on comparative advantage, not absolute advantage.
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