Please help me with these question. Thank you 1) The following two claims were made in an actual argument at a meeting of G20 governmentofficials. Do you agree with both of them, or only one of them, or none? Explain. (Assume along-run perspective.) claim 1 Chinese Premier: the U.S. policy of extraordinarily high money supply growth in recent years is exportinginflation to China and many other countries, and is partly to blame for a rising problem of inflation in thedeveloping world. claim 2 U.S. Finance Secretary: the real cause is that China and other countries fix their exchange rates to thedollar; if they let their currency float then U.S. inflation need not be a problem for other countries. 2. Using the IS–LM–FX model, illustrate how each of the following scenarios affects thehome country. Compare the outcomes when the home country has a fixed exchange ratewith the outcomes when the home currency floats. a. The foreign country increases the money supply b. The home country cuts taxes. c. Investors expect a future appreciation in the home currency.
Please help me with these question. Thank you
1) The following two claims were made in an actual argument at a meeting of G20 government
officials. Do you agree with both of them, or only one of them, or none? Explain. (Assume a
long-run perspective.)
claim 1
Chinese Premier: the U.S. policy of extraordinarily high money supply growth in recent years is exporting
inflation to China and many other countries, and is partly to blame for a rising problem of inflation in the
developing world.
claim 2
U.S. Finance Secretary: the real cause is that China and other countries fix their exchange rates to the
dollar; if they let their currency float then U.S. inflation need not be a problem for other countries.
2. Using the IS–LM–FX model, illustrate how each of the following scenarios affects the
home country. Compare the outcomes when the home country has a fixed exchange rate
with the outcomes when the home currency floats.
a. The foreign country increases the money supply
b. The home country cuts taxes.
c. Investors expect a future appreciation in the home currency.
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