SECTION 4: TRUE OR FALSE OR UNCERTAIN 25. According to the classical macroeconomic model, expansionary fiscal policy has an inflationary effect. 26. Assuming that you have free capital mobility and fixed exchange rate policy, then fiscal policy has a positive effect on output 27. Expansionary fiscal policy always has a depreciating effect on the domestic exchange rate. 28. According to the relative income hypothesis, the savings rate is a non-linear function of the ratio of current to previous peak income. 29. In the IS-LM-BOP model, macroeconomic adjustments occur through changes in money supply if the country adopts a fixed exchange rate regime. 30. According to the impossible trinity, a country that has a liberalized capital account and independent monetary policy will also achieve a stable exchange rate.

Q: Dear Sir/Madam while studying for my macroeconomics course, I came across this case study that I am…

A: Answer: In an open economy, national saving (S) is equal to the sum of investment (I) and current…

Q: Please select all of the following that are true regarding FX: An increase in demand for the FC will…

A: In an FX market, currencies are exchanged and the price of currencies (exchange rate) is determined…

Q: Consumption expenditure: Investment expenditure: Government budget balance Money demand C= 100 +0.8…

A:

Q: f Y (the output level) = $2 billions, consumption = $1 billion , and government purchases = $0.8…

A: The value of the commodities and services a nation produces in a fiscal year is referred to as…

Q: For the goods market of an open economy to be in equilibrium, the interest rate must be at 2% when…

A: C = 20 + b*Y_{D} I = 44 T = 60 G = 22 M = 16 X = 32

Q: Suppose you observed that, by-and-large, in times of economic recessions, China mainly adopts fiscal…

A: Monetary policy  refers to actions taken by the central bank with the intention of changing the…

Q: 18. When using fiscal policy to smooth out business cycle fluctuations, the government should: Raise…

A: Fiscal policy is the use of government spending and taxation to influence the economy. It is one of…

Q: 2. Using the aggregate demand and supply model (AD & AS), begin with an economy in a recession…

A: The total quantity of demand for all completed items and services produced in a given economy is…

Q: This question asks you to consider the effect of the COVID-19 crisis on US fiscal policy and global…

A: Expansionary fiscal policy occurs when government expenditures or transfer payments rise but tax…

Q: In an economy, desired consumption and investment are given by cd=5,000+ 0.20Y-4,500r = 2,400 4,000r…

A: Approach to solving the question: Begin by defining the desired consumption function, represents the…

Q: AS/AD framework to explain the effects of this shock

A: The entire amount of products and services that consumers, companies, the government, and overseas…

Q: If investment spending on net adds to the capital stock, we would expect that a-at first aggregate…

A: Aggregate demand (AD) is the sum total amount of commodities and services demanded in an economy at…

Q: Suppose a hypothetical open economy uses the U.S. dollar as currency. The table below presents data…

A: The net capital outflow is defined as the flow of funds invested out of the country during a…

Q: 10.) Which of the following is not a result of expansionary OMOs?       Less investment spending.…

A: Open Market Operations(OMO) is a monetary tool used by Federal Reserves to control the money…

Q: In a closed economy, Y = $17 billion C = $13.6 billion 1 = $1.7 billion TR= $1.0 billion T = $2.0…

A: The objective of the question is to calculate the private savings, public savings, total savings,…

Q: Consider a small open economy given by the following: Consumption Function: Ct = 17.2 + 0.7(Yd)t…

A: 1. In this case, IS curve is actually shows the investment and savings combination that means set of…

Q: Explain the aggregate demand curve. If we consider CPEC as an autonomous investment, use the…

A:

Q: The answer of the question below is attached as a photo. please advise whether the answer is correct…

A: Given; Net Exports= -$150 million Interest paid= $25 million Principal on its foreign debt= $75…

Q: data on the relationship between

A:

Q: Hints: Equilibrium Condition is S=I. If economy is open r=r*. Assume that in a small open economy…

A: Analysis of macroeconomic variables in the context of the open economy supports the development of…

Q: Savings, Investment, and Deficits Suppose a country has a closed economy, and at first it has the…

A: Real GDP (Y) = 800 Consumption (C) = 560 Government Spending (G) =120 C =c0  + C1(Y-T) Given the…

Q: The context in this is a large negative shock to autonomous consumption in an open economy. You may…

A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…

Q: Suppose GDP is $10,000 trillion, taxes are $1,500 trillion, consumption is $6,000 trillion, and…

A: The objective of the question is to calculate private savings, public savings, national savings, and…

Q: 1. Given the discussion of the effects of fiscal policy in this​ chapter, if the central bank does…

A: Fiscal policy refers to the use of government disbursement and tax policies to influence economic…

Q: In the graph that you have drawn in question 1, what is the state of the economy? Using fiscal…

A: The graph depicts the short run and long run aggregate supply curve and aggregate demand curve. In…

Q: If C= 5 +0.6Y, I=4-0.2 r, G = 5, T = 6, X = 10 dan M = 10+ 0.3 Y, Ms = 20, Mdt = 0.1 Y and Mds =…

A: C=5+0.6Y I=4-0.2r G=5 T=6 X=10 M=10+0.3Y Ms=20 Mdt=0.1Y Mds=5-0.1r

Q: Consider the following open economy: C = 40 + 0.85x YD I = 1500 G = 1600 X = 240 M = 0.12x Y TR = 10…

A: C = 40 + 0.85*YD Differentiate C w.r.t YD to get MPCD MPCD = dc / dYD => MPCD = 0.85…

Q: For the first three questions, please consider a closed economy with the following information (and…

A: Government purchases (G) = $30,000. Output (income, Y) = $300,000Taxes (T) = $20,000Total savings…

Q: Consider that a country is a net lender. a) Draw the graph to present net exports. Describe the…

A: GDP is the sum of the market value of all final goods and services produced within the domestic…

Q: Triniland is recognized as a high-income economy by the World Bank. Assume that    households in…

A: Macroeconomic monitoring will continue to be critical since it determines the economy's eventual…

Q: consider that there is a decrease in the investment demand. Analyze and graph its effects on:…

A: Due to decrease in investment demand,aggregate demand would decrease. Therefore exports and capital…

Q: In crisis periods such as 1975 and 2008-2010, we observe large increases in government budget…

A: A crisis period refers to the time period in which an economy is facing a downturn in economic and…

Q: Imagine that the economy is at a point that is below both AA and DD, where both the output and asset…

A: This is a MCQ question

Q: Suppose that the graph below represents the market for financial capital in Palau. How does an…

A: Budget deficits are a major component of budgeting and economic administration. This is because they…

Q: Consumption expenditure: Investment expenditure: C = 100 +0.8 Yª I= 120 - 500I Lump-sum taxes: T=150…

A: Equilibrium in the economy reaches where goods market and money market are in equilibrium. For goods…

Q: For each of the following statements, show graphically and explain the expected effets of the…

A: The nations around the globe are involved in the trading activities with each other. The nations…

Q: a. Suppose the central bank’s policy is to adjust the money supply to maintain the interest rate at…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…