Homework Answers
correct answer is (E) decrease in net exports
under flexible exchange rate, simultaneous increase in government spending and a monetary contraction leads to appreciation of domestic currency wheras effect on output depends on relative shifts in the AA curve and DD curve
The increase in the price of domestic goods relative to foreign goods tends to lower net exports by stimulating imports and depressing export. Therefore a fall in net exports
The schedule of exchange rate and output combinations that are consistent with equilibrium in the domestic money market and the foreign exchange market is called the AA schedule.
DD schedule shows all combinations of output and the exchange rate for which the output market is in short-run equilibrium
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Assume that there is a simultaneous increase in government spending and a monetary contraction. In a...
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f contractionary monetary policy is used, then which of the following would be most likely to enhance the effect of the contractionary policy on aggregate demand? Interest rates would increase, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate depreciation and a rise in net exports. Interest rates would increase, leading to...
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Please give a short answer to why what option is correct. Thanks 7. Suppose there are...
Please give a short answer to why what option is correct.
Thanks
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1. When the government increases spending by issuing more bonds, it causes: a) nations currency to...
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An increase in the money supply in a flexible exchange rate regime will cause: Select one:...
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Now, Assume that Peruvian government responds by using monetary policy to stabilize output after a shock....
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f contractionary monetary policy is used, then which of the following would be most likely to enhance the effect of the contractionary policy on aggregate demand? Interest rates would increase, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate appreciation and a fall in net exports. Interest rates would decrease, leading to an exchange rate depreciation and a rise in net exports. Interest rates would increase, leading to...
Please give a short answer to why what option is correct.
Thanks
7. Suppose there are two countries that are identical in every way with the following excep- tion. Country A is pursuing a fixed exchange rate regime and country B is pursuing a flexible exchange rate regime. Suppose taxes are increased in both countries by the same amount. Given this information, we know that A. the change in output in A will be greater than in B B. the...
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