Currency crises and the demand for dollars: Suppose there is a currency crisisin the rest of the world, leading to an increase in demand for U.S. dollars (a“fight to safety”). Use the AS/AD framework to explain the efects of thisshock on the U.S. economy. Be sure to explain carefully how and why theshock enters the AS/AD model. (Hint: If the rest of the world would likemore dollars, what does it have to give in exchange for those dollars?

Which of the following is likely to occur for the United States, if the U.S. dollar appreciates relative to the Japanese yen,     Answers: A.  Aggregate demand will increase (shift right).   B.  SRAS will decrease (shift left).   C.  Aggregate demand will decrease (shift left).   D.  LRAS will increase (shift right).

Which government institution can create the most money? What tools does the Fed have to regulate money creation in the economy? What is the long-run impact of a larger money supply on inflation? What can be the impact of that money creation on the exchange rate? Support your answer using the Quantitative Theory of Money formula MV = P Q; to analyze the effect of money creation on the exchange rate use the Purchasing Power Parity Model, Exchange Rate of Currency X to Y = Cost of good in currency X/Cost of good in currency Y

Give correct answer with short explanation

Use the money market and FX diagrams to answer the following questions. This question considers the relationship between the Indian rupee (Rs) and the U.S. dollar ($). The exchange rate is in rupees per dollar, ERs/$. On all graphs, label the initial equilibrium point A. a. Illustrate how a permanent increase in India’s money supply affects the money and FX markets. Label your short-run equilibrium point B and your long-run equilibrium point C. b. By plotting them on a chart with time on the horizontal axis, illustrate how each of the following variables changes over time (for India): nominal money supply MIN, price level PIN, real money supply MIN/PIN, interest rate iRs, and the exchange rate ERs/$. c. Using your previous analysis, state how each of the following variables changes in the short run (increase/decrease/no change): India’s interest rate iRs, ERs/$, expected exchange rate EeRs/$, and price level PIN. d. Using your previous analysis, state how each of the…

Imports and short-run output: In addition to depending on the exchange rate (and therefore on the interest rate), imports may depend on short-run output: when the economy is booming, consumers tend to demand more foreign goods. To incorporate this result into our short-run model, suppose the new net exports equation is Derive the IS curve with this new equation, and explain how it differs from the standard IS curve in the short-run model.  

How will the following event affect variables 1 through 3 in the foreign exchange market under a flexible exchange rate system; other things unchanged. Event: The U.S. Central Bank (the Fed) starts buying Chinese currency using dollar reserves: Variable 1: Supply of dollar in the foreign exchange market ___(increase, decrease, unaffected: briefly explain why). Variable 2: Value of dollar in the foreign exchange market unaffected: briefly explain why). Variable 3: American goods exported to China unaffected: briefly explain why). (appreciate, depreciate, (increae, decrease,

1. BHP Billiton is a new global challenger. A) true B) false   2. Nonconvertible currencies are hard currencies. A) true B) false   3. The key focus of the World Bank is helping countries to stabilize foreign exchange.  A) true B) false   4. A deposit of Euros held in banks in Germany is considered Eurocurrency. A) true     B) false   5. A strategic global team focuses on the efficient operation of the business across the network. A) true B) false   6. Among entry strategies, low-control strategies require substantial resource commitment. A) true B) false   7. Contracting with intermediaries in the foreign market to perform export functions enables firms’ indirect exporting. A) true     B) false   8. Technical support outsourcing is part of business process outsourcing (BPO). A) true B) false   9. Assume entity A (in a country with high corporate income tax) and entity B (in a country with low corporate income tax) are two subsidiaries of Company ABC. Entity A sells parts to entity B.…

19. Suppose consumers decide to save a smaller proportion of their income. What are the implications for the current account? The financial account?

Show how each of the following would affect the U.S. BOP. Include a description of the debit and credit items, and in each case say which specific account is affected (eg, CA, imports of goods and services, IM; FA, exports of financial assets, EXA; and so on). Suppose an American, David, is visiting Milan on business selling messenger bags to merchants. He spends a total of $800 (6500) for his hotel. David pays for his hotel using his Mastercard (held in the United States). The Milanese hotel now has a claim against Mastercard, so there is an increase in home assets owned by foreigners. In Milan, David meets with an Italian business associate, Francesco. Francesco plans to purchase a dozen of David's messenger bags (worth $120 each) for a bicycle messenger service he owns. He pays David the $1,440 using a checking account with Banca Intesa (an Italian bank). Please draw a table like the sample image (including arrows which indicate the increase or decrease) and explain a bit under…