a) Inflation rate in Germany has been rising recently and many policy-makers are concerned. What would be the expected reaction of the ECB to this kind of development? Also, give two reasons why the ECB has not reacted so far. b) Some years ago, US Administration accused China of being a “currency manipulator". What was the reason for these accusations (what was wrong with Chinese currency according to the Americans?) and why would have China wanted to manipulate its currency? If these accusations were correct, with which measure could have China achieved this manipulated currency? c) Instead of using prohibitions as a policy measure, economists prefer using price mechanisms. Is CO2 tax an example of that? Explain.
a) Inflation rate in Germany has been rising recently and many policy-makers are concerned. What would be the expected reaction of the ECB to this kind of development? Also, give two reasons why the ECB has not reacted so far. b) Some years ago, US Administration accused China of being a “currency manipulator". What was the reason for these accusations (what was wrong with Chinese currency according to the Americans?) and why would have China wanted to manipulate its currency? If these accusations were correct, with which measure could have China achieved this manipulated currency? c) Instead of using prohibitions as a policy measure, economists prefer using price mechanisms. Is CO2 tax an example of that? Explain.
Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:William J. Baumol, Alan S. Blinder
Chapter19: The International Monetary System: Order Or Disorder
Section: Chapter Questions
Problem 8DQ
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