(e) Given the effect on the real interest rate identified in part (d), what will happen to each of the following? (i) The supply of the country’s currency on the foreign exchange market. Explain. (ii) The international value of the country’s currency
Part (e) of the following question:
Assume that a country’s economy is in long-run equilibrium.
(a) Using a correctly labeled graph of aggregate
(b) Assume that increased uncertainty has reduced business orders for equipment. What is the impact of the change in business orders on each of the following in the short run?
(i) Aggregate demand. Explain.
(ii) Employment
(c) Based on the change in business orders, what will happen to the long-run
(d) Using a correctly labeled graph of the loanable funds market, show the effect of the change in business orders on the real interest rate in the country in the short run.
(e) Given the effect on the real interest rate identified in part (d), what will happen to each of the following?
(i) The supply of the country’s currency on the foreign exchange market. Explain.
(ii) The international value of the country’s currency
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