4. A further look at Table 19.1 Table 19.1 has four entries. Using Figure 19.5 as a guide, draw the situations illustrated in each of the four entries in Table 19.1. Be sure you understand why the direction of change in government spending and the real exchange rate is labelled as ambiguous in each entry. Table 19.1 Exchange rate and fiscal policy combinations Table 19.1 Exchange rate and fiscal policy combinations Initial Conditions Low output High output Trade Surplus 8? G↑ E↑ G? Trade Deficit el G? B? G↓ Net exports, NX Demand, Z ZZ' AG <0 ZZ ANX > 0 Demand for domestic goods 45° Y Y' Output, Y ANX > 0 B C NX' NX Output, Y

4. A further look at Table 19.1 Table 19.1 has four entries. Using Figure 19.5 as a guide, draw the situations illustrated in each of the four entries in Table 19.1. Be sure you understand why the direction of change in government spending and the real exchange rate is labelled as ambiguous in each entry. Table 19.1 Exchange rate and fiscal policy combinations Table 19.1 Exchange rate and fiscal policy combinations Initial Conditions Low output High output Trade Surplus 8? G↑ E↑ G? Trade Deficit el G? B? G↓ Net exports, NX Demand, Z ZZ' AG <0 ZZ ANX > 0 Demand for domestic goods 45° Y Y' Output, Y ANX > 0 B C NX' NX Output, Y

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 25CTQ: If a countrys currency is expected to appreciate in value, what would you think will be the impact...

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true false