You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the following questions. Provide a graphical explanation for your answers whenever possible. 4. What happens to the interest rate? A. increase B. decrease C. remains unchanged 5. What happens to the aggregate Demand curve? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged What is the effect on the foreign exchange market (the $ market)? 6. Demand? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged 7. Supply? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged
You have been hired as a Marco Economist by the President of the United States to help evaluate the recent
announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.
Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the
following questions. Provide a graphical explanation for your answers whenever possible.
4. What happens to the interest rate?
A. increase
B. decrease
C. remains unchanged
5. What happens to the aggregate
A. increase (shifts to the right)
B. decrease (shifts to the left)
C. remains unchanged
What is the effect on the foreign exchange
market (the $ market)?
6. Demand?
A. increase (shifts to the right)
B. decrease (shifts to the left)
C. remains unchanged
7. Supply?
A. increase (shifts to the right)
B. decrease (shifts to the left)
C. remains unchanged
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