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. What is the effect on the foreign exchange market (the $ market)? 12. What impact will this have on imports? A. increase B. decrease C. remains unchanged 13. What impact does the change in the exchange rate have on aggregate demand? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged 14. What happens to the aggregate supply curve? 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.
What is the effect on the foreign exchange
market (the $ market)?
12. What impact will this have on imports?
A. increase
B. decrease
C. remains unchanged
13. What impact does the change in the exchange
rate have on aggregate demand?
A. increase (shifts to the right)
B. decrease (shifts to the left)
C. remains unchanged
14. What happens to the
A. increase (shifts to the right)
B. decrease (shifts to the left)
C. remains unchanged
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