Annex 2A


Fig. 2: Macro-economic changes induced by excess demand

 tradables


EI \ \


K
N K

 N


n1 n2B I D


non-tradables


4. Perpetuation of a macro-economic disequilibrium

The results will be different if, in combination with an excess demand situation, a fixed
exchange rate policy is pursued by the Government. Figure 3 traces such a situation. p --' t
 r\2. --- n -5"
 Figure 3: Perpetuation of a macro-economic disequilibrium

 tradables


 HK

 E,. '\


 v\
 \. \



 --A:
.---- --- .-- ..-----



 P P

 n, n3 n12 D


--7 non-tradables
G


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