c. Assume the recession in Braveland causes a decrease in the demand for Macroland dollars in the foreign exchange market. Braveland’s currency is the euro. i. Explain whether the euro will appreciate, depreciate, or remain unchanged against the dollar ii. Draw a correctly labeled graph of the foreign exchange market for dollars and show the effect of the decrease in demand for dollars on the exchange rate for dollars. d. Macroland implements a combination of expansionary fiscal and monetary policies. What will be the effect of these policies on each of the following? i. Aggregate demand in Macroland ii. The price level in Macroland iii. Explain the effects of expansionary fiscal policies on interest rates in Macroland. iv. Explain the effects of expansionary monetary policies on interest rates in Macroland.
c. Assume the recession in Braveland causes a decrease in the demand for
Macroland dollars in the foreign exchange market. Braveland’s currency is the euro.
i. Explain whether the euro will appreciate, depreciate, or remain
unchanged against the dollar
ii. Draw a correctly labeled graph of the foreign exchange market for
dollars and show the effect of the decrease in demand for dollars on the
exchange rate for dollars.
d. Macroland implements a combination of expansionary fiscal and
i. Aggregate demand in Macroland
ii. The price level in Macroland
iii. Explain the effects of expansionary fiscal policies on interest rates in
Macroland.
iv. Explain the effects of expansionary monetary policies on interest rates in Macroland.
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