Higher savings means a lower demand for goods and services. Use the DD-AA model with flexible exchange rates to study the effect of higher savings .Q3A) What happens to output, interest rates, and the exchange rate? Q3B) Discuss how changes in the Exchange Rate affect aggregate demand and output through the Current Account. Draw a diagram and justify all your answers
Higher savings means a lower demand for goods and services. Use the DD-AA model with flexible exchange rates to study the effect of higher savings .Q3A) What happens to output, interest rates, and the exchange rate? Q3B) Discuss how changes in the Exchange Rate affect aggregate demand and output through the Current Account. Draw a diagram and justify all your answers
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Higher savings means a lower demand for goods and services. Use the DD-AA model with
flexible exchange rates to study the effect of higher savings .Q3A) What happens to output,
interest rates, and the exchange rate? Q3B) Discuss how changes in the Exchange Rate affect
aggregate demand and output through the Current Account. Draw a diagram and justify all your
answers.
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