Answered: If the chair of the U.S. Federal…

Business

Economics

If the chair of the U.S. Federal Reserve Board warns of an overheating economy, what will happen to the dollar? Why?

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter6: Managing In The Global Economy

Section: Chapter Questions

Problem 5E

See similar textbooks

Related questions

Q: The demand increase for foreign currency is caused by:

A: The foreign currency refers to the currency of another country. The countries can exchange their…

Q: Why do Governments also use the constant dollar?

A: Constant currency is used to showcase a fixed exchange rate which helps in removing fluctuations…

Q: Barbados currently used a fixed exchange rate regime. If the central bank were to increase the money…

A: A fixed exchange rate refers to when the rate at which the domestic currency is exchanged with other…

Q: Some countries, many being developing countries, peg their currency to the US dollar. What effect…

A: A pegged exchange rate regime is one in which a country's currency value is fixed or pegged against…

Q: Suppose the Bank of Canada contracts the money supply in an effort to reduce aggregate demand by a…

A: Meaning of Aggregate Demand: The term demand refers to the situation where an individual is…

Q: The figure shows the market for the British pound £, as the foreign currency for Japan, whose own…

A: In the flexible exchange rate regime the equilibrium exchange rate between two nations, the domestic…

Q: When the value of a dollar increases, how does this affect the supply and demand of the dollar? And…

A: Given: The value of dollar increases in the market. Increase in the value of dollar is the…

Q: If the European Central Bank decides to pursue a contractionary monetary policy to fight inflation,…

A: A domestic currency can either appreciate or depreciate in relation to the foreign currency.…

Q: What would be the effect of an increase in U.S. netexports on the aggregate demand curve? Would…

A: The net exports of the economy are the value of exports obtained after deducting the level of…

Q: Consider the gold standard. What happens to the price level if gold discoveries occur?

A: The gold standard is a financial framework where a nation's cash or paper cash has a worth…

Q: What are the four determinants of the demand of the Canadian dollar?

A: The urge to hold financial assets in the form of money is referred to as money demand. These…

Q: In the United States, the dollar is backed by silver. backed by gold and silver. backed by Bitcoin.…

A: A currency is backed means that a commodity backs or supports, like gold or silver. It means the…

Q: In the long run, a change in monetary policy will affect only the aggregate price level. True or…

A: The aggregate price level alludes to the general or total cost of the aggregate labor and products…

Q: Suppose country A’s goods become more popular with foreign consumers, and country B’s less so. How…

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: In Malaysia, the responsibility in implementing monetary policy is under the authority of A)…

A: Keynes advised during the great depression that government should interfere and take the…

Q: If the dollar falls in value compared to other currencies, what will happen in the United States?…

A: When the dollar value depreciate compared to other currencies, then the US goods become less…

Q: If a strike takes place in France, making it harder to buyFrench goods, what will happen to the…

A: The exchange rate refers to the value of domestic currency in terms of foreign currency. It is the…

Q: If the Fed shifts to a more restrictive monetary policy, and it utilizes the open market operations…

A: Hey, Thank you for the question. According to our policy we can only answer up to 3 sub parts per…

Q: Suppose the central bank in the nation of Zook attempts to pay off its national debt by printing…

A: When the price level rises in an economy, the quantity of goods and services that money can buy…

Q: How can an expansionary monetary policy could solve the problem of a decline in economy activity

A: The monetary and fiscal policies are used by the governments to achieve certain economic goals. The…

Q: Briefly describe the current international monetarysystem. How does the current system differ…

A: The current international monetary system is floating or flexible rate system for most…

Q: This summer has been very hot. In fact, many crops that need water to thrive have been suffering…

A: When there is a rise in imports or a fall in the export of a country it implies a negative impact on…

Q: What would be a major disadvantage to dollarization? How would a central bank work in a country that…

A: Dollarization is the phenomenon where a country uses the currency of another country in addition to…

Q: Can you think of any major disadvantages to dollarization? How would a central bank work in a…

A: Dollarization occurs when a nation adopts a currency of some another country and uses it for legal…

Q: How does an expansion of the money supply affect the aggregate-demand curve? How does your answer…

A: An expansionary monetary policy is a concept where the central bank used is both quantitative and…

Q: Suppose country A’s goods become more popular with foreign consumers, and country B’s less so. How…

A: Economics as a subject deals with the allocation of scarce resources among humans with unlimited…

Q: How would you expect financial markets, or exchange rates to respond to inflation

A: In an economy, any change in inflation rate will have a significant effect on economic drivers such…

Q: If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US…

A: The exchange rate is determined by value of export and import because the demand and supply of…

Q: When a central bank sterilizes a foreign exchange purchase, it offsets the purchase with a. an…

A: Exchange rate is determined through market mechanism or demand and supply forces . It is the rate at…

Q: What does it mean when the dollar appreciates compared to when the dollar depreciates? Has the US…

A: Depreciation of money means the declining value of the currency in terms of the exchange rate.

Q: where a country which currently uses a fixed exchange rate regime; If the central bank were to…

A: Meaning of Money Supply: The term money supply refers to the situation under which the overall or…

Q: Deliberate on the transmission of monetary policy?

A: The monetary policy of the economy is the policy of the central bank regarding the money supply of…

Q: Suppose country A’s goods becomes more popular with foreign consumers, and country B’s less so. How…

A: Macroeconomics is a part of economics that deals with production, decision, and allocation…

Question

If the chair of the U.S. Federal Reserve Board warns of an overheating economy, what will happen to the dollar? Why?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

If Ben Bernanke, Chair of the Federal Reserve Board, begins to tighten monetary policy by raising US interest rates next year, what is the likely impact on the value of the dollar?
How would you expect financial markets, or exchange rates to respond to inflation?
Barbados currently used a fixed exchange rate regime. If the central bank were to increase the money supply, what impacts would it have on the economy ? Use a diagram to explain your answer.
If a strike takes place in France, making it harder to buyFrench goods, what will happen to the value of the U.S.dollar?
The South African Reserve Bank (SARB) seeks to maintain liquidity in the money market using a variety of monetary instruments. The exchange rate is crucial for the Reserve Bank to achieve its dual mandate of price stability. Write a brief essay discussing the importance of the exchange rate in maintaining price stability.
Why do Governments also use the constant dollar?
A country utilizes a fixed exchange rate. If the central bank were to increase the money supply, what impacts would it have on the economy? Use a diagram to explain your answer.
Suppose country A’s goods becomes more popular with foreign consumers, and country B’s less so. How would this affect each country, assuming that they (a) have their own independent currency and (b) share a common currency? Use the Aggregate Demand and Aggregate Supply framework to explain your answer, and comment briefly on the desirability of currency union.
What happens to the price level and GDP if there is an increase in the exchange rate?
If the price of one gallon of gasoline goes down from $4.07 per gallon to $3.99 per gallon, how will that affect the value of the US dollar? Why does it affect the value of the dollar?
What happens to the exchange rate of a country’s currency when that country experiences high levels of inflation for an extended period of time? How will it affect the flow of that country’s currency in and out of the country? Explain your answers.
Will an increase in attractiveness of the US as a tourist destination DECREASE or INCREASE the value of US dollar?