describe the effects of a decline in the domestic real interest rate on the exchange rate...
describe the effects of a decline in the domestic real interest rate on the exchange rate and on both domestic and foreign net exports
Homework Answers
A fall in the domestic interest rate will increase the demand for the foreign currency that will lead to a depreciation of the local currency, At a depreciated rate the local exports will increase and local imports will decrease as the imports are much costlier now, This will increase the net exports of the nation.
For the foreign nation there currency will appreciate and imports will increase and exports will decrease, this will decrease the net foreign exports.
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describe the effects of a decline in the domestic real interest
rate on the exchange rate...
Describe the effects of contractionary fiscal policy by the domestic government on output, the real interest...
Describe the effects of contractionary fiscal policy by the domestic government on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model.
Describe the effects of contractionary monetary policy by the domestic central bank on output, the real...
Describe the effects of contractionary monetary policy by the domestic central bank on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model in the short run. What happens in the long run? (Word Limit: 100 words)
What happens to the real exchange rate and net exports in each of the following cases?...
What happens to the real exchange rate and net exports in each of the following cases? a. The world interest rate rises (r*) b. expansionary fiscal policy at home i.e. domestic output rises c. Foreign demand for domestic goods falls as result of contraction fiscal policy at abroad d. Import restrictions i.e. quota or tariffs on foreign goods e. The domestic prices rise more than foreign prices f. nominal exchange rate e falls
4. Show and describe what happens in a LARGE OPEN ECONOMY to consumption (C), real interest rates (r), domestic inv...
4. Show and describe what happens in a LARGE OPEN ECONOMY to consumption (C), real interest rates (r), domestic investment (I), domestic savings (S), net exports (NX), capital flow (CF), and the real exchange rate (E) when there is a decrease in government spending in the large open economy. Show all steps.
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign...
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. What is the nominal exchange rate? (3%) a. Suppose the real exchange rate rises by 10%, the inflation rate in the domestic b. country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change? (3%) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by...
What happens to the real exchange rate and net exports in each of the following cases?...
What happens to the real exchange rate and net exports in each of the following cases? a. Import restrictions i.e. quota or tariffs on foreign goods b. The domestic prices rise more than foreign prices c. nominal exchange rate e falls
2. The percentage change in the nominal exchange rate equals the percentage change in the real...
2. The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate plus the: A) foreign inflation rate minus the domestic inflation rate. B) domestic inflation rate minus the foreign inflation rate. C) foreign exchange rate minus the domestic exchange rate. D) domestic interest rate minus the foreign interest rate.
The current exchange rate is $0.7000 per € and the six-month domestic and foreign risk-free interest...
The current exchange rate is $0.7000 per € and the six-month domestic and foreign risk-free interest rates are 5% and 7% per annum (both expressed with continuous compounding). If the six-month forward rate is quoted currently at $0.6000 per €, compute the domestic yield (DY) and the covered foreign yield (CFY) for the six-month period.
The nominal exchange rate (E) as defined in the text represents the price of domestic currency...
The nominal exchange rate (E) as defined in the text represents the price of domestic currency in terms of foreign currency. none of the above the number of units of foreign currency you can obtain with one unit of domestic currency. the number of units of domestic goods you can obtain with one unit of foreign goods. both A and C For this question, suppose the domestic interest rate is 4% and that the foreign interest rate is 7%. And...
A reduction in 12. the real exchange rate indicates that Group of answer choices foreign goods...
A reduction in 12. the real
exchange rate indicates that Group of answer choices foreign goods
are now relatively cheaper. foreign goods are now relatively more
expensive. domestic goods are now relatively more expensive. both A
and C
Question 12 A reduction in the real exchange rate indicates that O foreign goods are now relatively cheaper. O foreign goods are now relatively more expensive. o domestic goods are now relatively more expensive. both A and C
4. Show and describe what happens in a LARGE OPEN ECONOMY to consumption (C), real interest rates (r), domestic investment (I), domestic savings (S), net exports (NX), capital flow (CF), and the real exchange rate (E) when there is a decrease in government spending in the large open economy. Show all steps.
Suppose the real exchange rate is 10, the domestic price level is 8, and the foreign price level is 4. What is the nominal exchange rate? (3%) a. Suppose the real exchange rate rises by 10%, the inflation rate in the domestic b. country is 6%, and the inflation rate in the foreign country is 4%. By what percentage does the nominal exchange rate change? (3%) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by...
2. The percentage change in the nominal exchange rate equals the percentage change in the real exchange rate plus the: A) foreign inflation rate minus the domestic inflation rate. B) domestic inflation rate minus the foreign inflation rate. C) foreign exchange rate minus the domestic exchange rate. D) domestic interest rate minus the foreign interest rate.
The nominal exchange rate (E) as defined in the text represents the price of domestic currency in terms of foreign currency. none of the above the number of units of foreign currency you can obtain with one unit of domestic currency. the number of units of domestic goods you can obtain with one unit of foreign goods. both A and C For this question, suppose the domestic interest rate is 4% and that the foreign interest rate is 7%. And...
A reduction in 12. the real
exchange rate indicates that Group of answer choices foreign goods
are now relatively cheaper. foreign goods are now relatively more
expensive. domestic goods are now relatively more expensive. both A
and C
Question 12 A reduction in the real exchange rate indicates that O foreign goods are now relatively cheaper. O foreign goods are now relatively more expensive. o domestic goods are now relatively more expensive. both A and C
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