QUESTION 2Select all that are true regarding the balance of payments (BOP):O The balance of payments is an idea that holds over the long run since it depends on adjustments in the fx rate to alter supply and demand flows in fxmarketO Since the balance of payments is market driven rather than policy driven (two opposing policies across the pair), it will be in equilibrium (i.e. equal tozero), like all marketsThe balance of payments theory suggests that the net investment flows and trade flows between two countries (currency pairs, excluding foreignreserves) should balance to zero (in flows less out flows)The balance of payments is unlikely to exactly balance since it relies on imperfect arbitrage across international boarders.

BOP: It refers to a systematic record of all the economic transactions that took place between two…

Answered: Select all that are true regarding the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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According to the Marshall-Lerner condition, when a country's currency depreciates in real terms its trade balance will improve if Your answer: O elasticity of demand for exports = 0.9; elasticity of demand for imports = -0.4 O elasticity of demand for exports = -0.8; elasticity of demand for imports = -0.3 O elasticity of demand for exports = 0.5; elasticity of demand for imports =- 0.2 O elasticity of demand for exports = 0.3; elasticity of demand for imports = -0.5
Price Level P a T T T T LAS O Reference. Figure 9-16 I 1 T 1 B Q₁ Q₂ Real Output SAS, SAS, Refer to the graph above. Assume the economy is initially at point B. The graph correctly demonstrates an economy moving to point C if: the government decreases the money supply. O productivity increases by less than the increase in wages. O a country's exchange rate appreciates (gains value). wages rise by less than the increase in productivity. 11
QUESTION 2Consider a country with a flexible exchange rate. If the central bank of this country raises its interest rate by 0.5%-points, whereas observers had anticipated an increase of only 0.25%-points, one can expect that: Bond prices and stock prices rise, the country’s currency depreciatesBond prices rise, stock prices fall, the country’s currency appreciatesBond prices fall, stock prices rise, the country’s currency depreciatesBond prices and stock prices fall, the country’s currency appreciates
4. Use the Mundell-Fleming model to predict what would happen to real GDP, the exchange rate, and net exports under both floating and fixed exchange rate regimes in response to each of the following shocks. Your answers should be in the form of fully-labeled graphs, where any curve shifts and new equilibrium are clearly shown. (a) Consumer confidence in the economy is falling, so consumers start to spend less. (b) Toyota designed a line of stylish new cars, making consumers prefer foreign cars over domestic cars. Banks double the number of ATMs (automatic teller machines) around the economy, reducing the demand for money.
Hand written plz otherwise downvote If a country switches from a flexible exchange rate regime to a fixed exchange rate regime, this implies that: O a given change in government spending will now have a greater effect on output both fiscal and monetary policy will become more effective in changing GDP O both fiscal and monetary policy will become completely ineffective in changing GDP O monetary policy will become a more effective tool for changing output O a given change in government spending will now have a smaller effect on output
1
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,
Explanation it very good and clear. Not copy paste from anywhere.and give concept throughout
QUESTION 2 In the long run, an increase in the nominal exchange rate is likely to lead to Note: Multiple answers are possible. O A. an increase in exports ) B. a decrease in exports C. an increase in imports D. a decrease in imports
14. Today many Central Banks around the World are thinking of Increasing interest rates. Why? What could be the dangers of increasing those interest rates too much? 15. What will happen to the trade balance and the real exchange rate of a small open economy when govenment purchases increase, such as during a war? Does your answer depend on whether this is a local war or a global war? On those grounds, In the current situation of the Russian invasion, what should happen between the dollar and the Euro?
Please help me with this questions. Thank you 1. Using the IS–LM–FX model, illustrate how an increase in the home country’sgovernment spending affects the home country. Compare the outcome when the homecountry has a fixed exchange rate with the outcome when the home currency floats. Foreach case, state the effect of the increase in the home country’s government spending(increase, decrease, no change, or ambiguous) on the following variables: Y, i, E, C, I,TB. 2. During the 1980s, the United States experienced “twin deficits” in the currentaccount and government budget. Since 1998 the U.S. current account deficit has grownsteadily along with rising government budget deficits. Do government budget deficitslead to current account deficits? Identify other possible sources of the current accountdeficits. Do current account deficits necessarily indicate problems in the economy? 3. Suppose the Japanese government is considering two policies. One policy wouldinvolve increasing government…
QUESTION 50 Which of the following could be a consequence of a depreciation of the United Kingdom exchange rate? O a. John, a French citizen, decides that Cornish pasties in the United Kingdom have become too expensive and cancels his order. O b. Both (b) and (c). O c. Roberta, a United Kingdom citizen, decides to import fewer windshield wipers for her auto part company. O d. Nick, a United Kingdom citizen, decides that the trip to Nepal he has been thinking about is now made affordable by the depreciation.

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