Lecture: Open MacroQuestion: A currency appreciation moves the BP curve to the ... because exports... and imports . . The interest ratemust .... sincecapital inflows are needed..........O a. left ; increase; decline; fall ; lowerO b. left; decline; increase; rise; higherO C right; decline; increase; rise; higherO d.right; increase; decline ; fall ; lowere.right; increase; decline; rise; lower

The IS-LM-BP model is an expansion of the IS-LM model for open economies. The model analyses the…

Question: A currency appreciation moves the BP curve to the . . because exports.. and imports . . The interest rate ..... ........ ......... must . since . capital inflows are needed. .... . .....e O a. left ; increase; decline; fall; lower O b. left; decline; increase; rise; higher right; decline; increase; rise; higher O d. right; increase ; decline ; fall ; lower Oe. right; increase ; decline; rise; lower

Question: A currency appreciation moves the BP curve to the . . because exports.. and imports . . The interest rate ..... ........ ......... must . since . capital inflows are needed. .... . .....e O a. left ; increase; decline; fall; lower O b. left; decline; increase; rise; higher right; decline; increase; rise; higher O d. right; increase ; decline ; fall ; lower Oe. right; increase ; decline; rise; lower

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

8. In a small open economy, net exports NX depend negatively on domestic in- come Y and negatively on the real exchange rate & = = eP/P*, where e is the nom- inal exchange rate (the foreign-currency price of domestic currency), and P and P* are the domestic- and foreign-currency prices of domestically and foreign- produced goods, respectively. Assume initially that both P and P* are fixed. There is perfect mobility of capital, so balance-of-payments equilibrium requires that i i*, where i and it are the domestic and foreign interest rates. Assume the economy adopts a flexible exchange rate regime. = (a) Using the IS-LM-BP model, carefully explain whether monetary policy and/or fiscal policy can succeed in raising the economy's GDP. Now assume instead that the economy adopts a fixed exchange rate regime. (b) For each of the policies below, explain what foreign-exchange market intervention is required to support the fixed exchange rate, and whether the policy would succeed in raising…
Hi can you please explain the below with a diagram :) Compare Australia’s position in the long run after an international fiscal expansion vs after an international monetary expansion. You may assume that the world expansion is modelled by a world IS and LM curve and that a single shift of a curve determines the world interest rate and there is no world inflationary pressure. Assume Australia has a floating exchange rate.
C= C0 + cYD YD = Y I = I0 - br NX = N0 - n1Y + n2Yf + n3R M/P = M0 + m0Y - m1.r where AD = C + I + G0 + NX. What is the impact of M0 and G0 on the equilibrium value of R. That is, discuss the role ofmonetary policy and fiscal policy on the real exchange rate.
Q3-19 The IS/LM/BP analysis suggests that, if the BP curve is flatter than the LM curve and the exchange rate is flexible, expansionary fiscal policy will lead to _______ of the country's currency.This will make the fiscal policy _______ effective in influencing national income than if the country had a fixed exchange rate. Select one: a. a depreciation / more b. a depreciation / less c. an appreciation / more d. an appreciation / less
Analyze the adjustment of the dollar/euro exchange rate following a permanent increase inthe U.S. money supply. In your analysis show both the short-run and the long-run effects ofthis disturbance. Suppose that the economy starts with all variables at their long-run levelsand that output remains constant as the economy adjusts to the money supply change. Alsoassume that the decrease in the money supply affects exchange rate expectations today. Please illiustrate any graph if needed. Thank you
If a country's currency depreciates, what would be the effect on the Bala Select one: O a. It becomes flatter. O b. A shift to the right. O c. It becomes steeper. Od. A shift to the left.
In the long run, with variable real exchange rates, if American goods become less attractive relative to European goods, the dollar will experience a real and a nominal | O appreciation; appreciation O appreciation; depreciation O depreciation; appreciation O depreciation; depreciation
Price Level P a T T T T LAS O Reference. Figure 9-16 I 1 T 1 B Q₁ Q₂ Real Output SAS, SAS, Refer to the graph above. Assume the economy is initially at point B. The graph correctly demonstrates an economy moving to point C if: the government decreases the money supply. O productivity increases by less than the increase in wages. O a country's exchange rate appreciates (gains value). wages rise by less than the increase in productivity. 11
! Who benefits from an appreciation of the Swiss Franc? Who benefits from a depreciation of the Swiss Franc? Why would the Swiss government be concerned about a strong appreciation of the Swiss Franc?
Suppose a country's central bank announces that it is decreasing the long-run money growth rate to tame inflation. The country's currency will suddenly and its rate of depreciation will then O appreciate; rise O appreciate; fall O depreciate; rise O depreciate; fall
Concerning a country's business cycle, rapid growth of production and employment is commonly associated with: Select one: O a. Small or shrinking trade deficits and current account deficits O b. Large or growing trade deficits and current account deficits Oc. Small or shrinking trade deficits and current account surpluses O d. Large or growing trade surpluses and current account surpluses
Assume that initially PPP holds, the theory of PPP suggests that if one country's price level rises relative to another's, its currency is and should Select one: O a. undervalued; depreciate O b. overvalued; depreciate O c. overvalued; appreciate O d. remain unchanged O e. undervalued; appreciate Next page to search