4. Assume that Canada is a small open economy which uses a system of flexible exchange...
4. Assume that Canada is a small open economy which uses a system of flexible
exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand.
Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in
the long-run
Homework Answers
Add Answer to:
4. Assume that Canada is a small open economy which uses a
system of flexible
exchange...
Question 3 (10 Marks): Assume that Canada is a small open economy which uses a system...
Question 3 (10 Marks): Assume that Canada is a small open economy which uses a system of fixed exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand. Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in the long-run. Question 4 (10 Marks): Assume that Canada is a small open economy which uses a system of flexible exchange rates. The economy is in...
Question 4 (10 Marks): Assume that Canada is a small open economy which uses a system of flexible exchange rates. Th...
Question 4 (10 Marks): Assume that Canada is a small open economy which uses a system of flexible exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand. Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in the long-run.
3. Assume that Canada is a small open economy which uses a system of fixed exchange...
3. Assume that Canada is a small open economy which uses a system of fixed exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand. Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in the long-run
Economics 303(02) Assignment 2 continued Page 2 of 2 Question 3 (10 Marks): Assume that Canada...
Economics 303(02) Assignment 2 continued Page 2 of 2 Question 3 (10 Marks): Assume that Canada is a small open economy which uses a system of fixed exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand. Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in the long-run.
Assume you are in a small open economy with flexible exchange rates. The economy experiences a permanent negative supply...
Assume you are in a small open economy with flexible exchange rates. The economy experiences a permanent negative supply shock. (a) Draw the IS − RX, the PC − MR and the ERU− AD graphs to help you explain the path back to medium run equilibrium. (b) Draw a graph of the real exchange rate over time and give a brief explanation of its path. (c) How does the medium run equilibrium vary from that in the closed economy?
Macroland is a small open economy with perfect capital mobility and a fixed-exchange-rate system. Macroland is...
Macroland is a small open economy with perfect capital mobility and a fixed-exchange-rate system. Macroland is initially in the long-run equilibrium at the natural level of output with balanced trade. With the help of an appropriate diagram, compare the impact of a tax cut in the short run (when prices are fixed) and in the long run (when prices are flexible) on: 1. Output, 2. Consumption, 3. Investment, 4. Net exports 5. Exchange rate.
Assumed that country Alpha is a small open economy in which has practiced a flexible exchange...
Assumed that country Alpha is a small open economy in which has practiced a flexible exchange rate system. The economy has experienced a permanent positive aggregate demand shock due to an increase in consumer spending and private investment. Based on this situation: a. Draw the PC-MR, the IS-RX, and the AD-ERU diagram to help you explain the path back to medium-run equilibrium (MRE). b. Draw a graph of the real exchange rate over time and give a brief explanation of...
Question 31 2 pts In a small open-economy, assume short-run equilibrium levels of output are below...
Question 31 2 pts In a small open-economy, assume short-run equilibrium levels of output are below the natural rate of output. Going from the short-run to the long-rurn equilibrium, output will land prices will decrease; decrease decrease; increase increase; decrease increase: increase Question 32 2 pts Based on the below graph, if the economy starts from a short-term equilibrium at Point A, then the long-run equilibrium will be at-_ with a __ price level. Exhibit: Short Run to Long Run...
2. Consider a small open country (Veniceland) with flexible exchange rate and perfect capital mobility. The economy is...
2. Consider a small open country (Veniceland) with flexible exchange rate and perfect capital mobility. The economy is at the short-run equilibrium, and the domestic and foreign bonds pay the same interest rate. The government aims at increasing households' consumption to stimulate an economic recovery. Which policy should the government adopt? [2p] a. b. Explain the main economic adjustments leading to the new short-run equilibrium income and interest rate. [4p] How does the policy of the government affect the balance...
Consider a small open economy with floating exchange rates. The LM curve of this economy is...
Consider a small open economy with floating exchange rates. The LM curve of this economy is given as ??=20,000???200+(????), and the IS curve is given as ??=500?20,000??+????, where ????=600?300??. Suppose that ??=1,??=100, and the world interest rate (???) is 0.025. 1) Find out the equilibrium values of output (Y), exchange rate (e), and net export (NX) of this economy. ANSWERS = Y = 400, NX = 400, e = 2/3. 2) Suppose the central bank increases the money supply to...
Question 3 (10 Marks): Assume that Canada is a small open economy which uses a system of fixed exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand. Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in the long-run. Question 4 (10 Marks): Assume that Canada is a small open economy which uses a system of flexible exchange rates. The economy is in...
Question 4 (10 Marks): Assume that Canada is a small open economy which uses a system of flexible exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand. Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in the long-run.
Economics 303(02) Assignment 2 continued Page 2 of 2 Question 3 (10 Marks): Assume that Canada is a small open economy which uses a system of fixed exchange rates. The economy is in equilibrium when there is a sudden decrease in real money demand. Explain what will happen to the exchange rate, output, and the real interest rate in the short-run and in the long-run.
Question 31 2 pts In a small open-economy, assume short-run equilibrium levels of output are below the natural rate of output. Going from the short-run to the long-rurn equilibrium, output will land prices will decrease; decrease decrease; increase increase; decrease increase: increase Question 32 2 pts Based on the below graph, if the economy starts from a short-term equilibrium at Point A, then the long-run equilibrium will be at-_ with a __ price level. Exhibit: Short Run to Long Run...
2. Consider a small open country (Veniceland) with flexible exchange rate and perfect capital mobility. The economy is at the short-run equilibrium, and the domestic and foreign bonds pay the same interest rate. The government aims at increasing households' consumption to stimulate an economic recovery. Which policy should the government adopt? [2p] a. b. Explain the main economic adjustments leading to the new short-run equilibrium income and interest rate. [4p] How does the policy of the government affect the balance...
Most questions answered within 3 hours.
-
Group Policies
Research GROUP POLICY OBJECTS (GPO'S)
You can start in the Windows Server 2012 eBook...
asked 2 minutes ago -
software engineering
Problems.
Create a use case diagram for class registration for a
university.
Create a...
asked 2 minutes ago -
You are trying to convince your friend who wants to attend
medical school to take BY123...
asked 17 minutes ago -
Subject: C++
I have created a class called QueueOfIntegers in a file called
QueueOfIntegers.h, which is...
asked 17 minutes ago -
calculate the number of molecules of gas in a
container of 2.0 liter at 30 degrees...
asked 34 minutes ago -
1.which of the following is a phototroph?
a. sulfolobus
b. chloroflexus
c. bacteroidetes
d. deinococcus radioduran...
asked 30 minutes ago -
The group of companies LC "High-precision measuring instruments"
is the global provider of measurement, analysis and...
asked 36 minutes ago -
I want to write a python function to find the minimum
I have an nested list:...
asked 36 minutes ago -
Convert the high level language programming statementts to 80x86
assembly, Assume X=AX and y=BX
for (i=1;...
asked 45 minutes ago -
SoleMate’s Burkins sneakers cost $40 per pair from the supplier
and are sold by SoleMate at...
asked 49 minutes ago -
The movie Moneyball (based on the book by Michael
Lewis) tells the story of Billy Beane,...
asked 49 minutes ago -
A regional highway uses 8 tollbooths that are open to all
vehicles. A chi-square goodness-of-fit test...
asked 52 minutes ago