Explain how floating exchange rates in the United States can help insulate the U.S. economy from a recession in Europe compared to a fixed exchange rate regime. |
Explain how floating exchange rates in the United States can help insulate the U.S. economy from...
please help, will rate, Explain how floating exchange rates in the United States can help insulate the U.S. economy from a recession in Europe compared to a fixed exchange rate regime.
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...
Book Principals of Finance question 17-3 Explain how the Federal Reserve manages to monetary policy of the United States. If the economy was in a recession characterized by high interest rates, what actions might the Fed take to exert downward pressure on those interest rates?
89. Now assume that both France and the United States have fiat money with floating (flexible) exchange rates. The central bank of France is holding the money stock constant. At the same time the central bank of the United States (the Fed) is expanding that country's money stock at a high rate, say 25 percent per year. If the demand for money remains constant in both countries, which of the following predictions is correct (a) the U.S. dollar will appreciate...
answer the following: d. In the Mundell-Fleming model with floating exchange rates, explain what happens to aggregate income, the exchange rate, and the trade balance when taxes are raised. What would happen if exchange rates were fixed rather than floating?
A major economic benefit of fixed exchange rates compared to floating rates is that a. the prices of goods and services remains the same across all participating countries. b. they help to establish convergence in per capita income across participation countries. c. they help countries conduct independent monetary policies. d. they simplify economic calculations and provide a more predictable basis for international transactions.
Investigate current exchange rates with at least two countries outside The United States to make comparisons on how the current exchange rates might affect trade with our country. I chose Germany and Switzerland, how does their exchange rate with the United States affect trade?
Explain the factors affecting exchange rates in a floating exchange rate system. (more details)
Explain how differences in economic systems, economic institutions, how the economy is organized, the rate of economic growth, or other economic factors such as GDP, inflation rate, interest rates, etc. that are different in Israel when compared to economic factors in the United States that can affect how business is conducted, the types of products you can sell, or, how differences in the economy can affect business decisions.
5. a. Economists sometimes refer to the attempt by countries to fix their exchange rates, control their money supplies, and operate with open capital accounts in their balance of payments (that is, to have no restrictions on capital movements) as the "impossible trinity" of international macroeconomics. Based on what you have learned so far, would you agree that this combination of policies is impossible to achieve? Explain. b. Use three of the models you have studied (the fixed exchange rate,...