otherwise downvote switches from a flexible exchange rate regime to a fixed exchange rate regime, this implies that: change in government spending will now have a greater effect on output cal and monetary policy will become more effective in changing GDP cal and monetary policy will become completely ineffective in changing GDP ry policy will become a more effective tool for changing output change in government spending will now have a smaller effect on output

otherwise downvote switches from a flexible exchange rate regime to a fixed exchange rate regime, this implies that: change in government spending will now have a greater effect on output cal and monetary policy will become more effective in changing GDP cal and monetary policy will become completely ineffective in changing GDP ry policy will become a more effective tool for changing output change in government spending will now have a smaller effect on output

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Why has it been politically challenging for governments to refocus efforts on new technology, education, and physical capital investment since the 2008-2009 recession? Select the correct answer below. They have focused on short-term recovery, but not enough on the long-term. O They have focused on long-term recovery, but not enough on the short-term. Efforts have instead been directed towards keeping the exchange rate constant. High-income countries do not prioritize the development of new technology, education, or physical capital investments.
To address a persistent current account deficit in the balance of payments, a government could undertake measures such as: A) Discouraging foreign investment B) Reducing government spending on social services C) Devaluing the national currency to make exports more competitive increasing the importar iuxtry goods in the ance of any
"If monetary policy is used to set the market equilibrium value of the exchange rate equal to the official value. it O will increase the rate of growth in the economy will be unable to stabilize the market equilibrium value of the exchange rate will simultaneously stabilize the domestic economy is no longer available to stabilize the domestic economy
In an open economy under flexible exchange rates where the central bank keeps money supply fixed, a tax cut will cause an increase in which of the following?net exportsthe exchange rate, Eexportsall of the abovenone of the above
This is not a writing assignment, this is a multiple-choice question Based on the discussion of these two ideas in this chapter which of the below statements would you consider to be INCORRECT? Group of answer choices The PPP only focuses on internationally tradable items, while the exchange rate has a broader focus and includes both internationally tradable and items that are not internationally tradable. Exchage rates include only the values of internationally tradable items, while the PPP includes both internationally tradable items as well as those which are not internationally tradable items but are used by people in different countries. The rate at which one currency can be exchanged for another is the exchange rate. If $25 can purchase a bundle of goods in the U.S. and if a comparable bundle of goods wil cost 750 rubles in Russia, then the PPP between the U.S. dollar and the Russian ruble would be $25=750 Russian rubles.
Suppose for Home: Ms=2169, Md/P=5767-99865*R, P=2 Suppose for Foreign:Ms=2655, Md/P=7099-98140*R, P=1 Suppose Absolute PPP holds. What is the expected exchange rate Ee?
In the short run of a model with sticky prices, a reduction in the money supply raises the nominal interest rate and appreciates the currency. In this case the country's expected real interest rate will In addition, the real exchange rate, after initially will subsequently The latter movement of the real exchange rate satisfies the real interest parity condition which indicates that a country's currency will be expected to undergo a real depreciation when its real interest rate ▼real interest rates elsewhere.
What will be the amount of Current account BOP if the Trade balance is $165 and invisible balance is $150 ???
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Using the IS-LM-UIP diagram, show and explain the effect of the increase in taxes in the fixed exchange rate regime. Comment the efficiency of such shock.
OPEN ECONOMY Consider a small open economy. Predict what will happen to the following variables in response to the events indicated in the first column. For savings, investments, trade balance, and domestic interest rate, indicate whether the variable rises or falls or exhibits no change. For the exchange rate, indicate whether it appreciates or depreciates. Domestic Real Nominal Trade Interest Exchange Exchange Savings Investments Balance Rate Rate Rate Government implements a program granting an investment tax credit to domestic firms Sketch a graph of the situation above
Use the model of small open economy to predict what would happen to the trade balance,and the real exchange rate in response to each of the following events. Use a graph to illustrateyour answer and explain the graph. Please label the graph completely, including indicating allcurves in the graph and label the axes.a) A fall in consumer confidence about the future induces consumers to spend less and savemore.b) A tax reform increases the incentive for business to build new factories