EBK MACROECONOMICS (FOURTH EDITION)
4th Edition
ISBN: 9780393616125
Author: Jones
Publisher: YUZU
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Chapter 13, Problem 1RQ
To determine
Explain how the
Expert Solution & Answer
Explanation of Solution
In an economy, thinking of rule in terms of rule is helpful to understand the US monetary policy because it helps the private sector to form precise expectation about the future. If the central bank decreases uncertainty by following a rule, then private businesses and workers will be better able to plan for the future and which may develop an economic stability. When a rule is used, then the economic stimulation can run when compared to a favorite rule against other policy rules; by that way, one can find out which rule is the best. Rules are easy to compare with one another, while decision is hard to compare with anything. Thus, it is just wind up with high inflation and an average economy.
Economics Concept Introduction
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Students have asked these similar questions
In a small open economy with a floating exchange rate, the supply of real money balances is fixed and a rise in government spending ______
Group of answer choices
Raises the interest rate so that net exports must fall to maintain equilibrium in the goods market.
Cannot change the interest rate so that net exports must fall to maintain equilibrium in the goods market.
Cannot change the interest rate so income must rise to maintain equilibrium in the money market
Raises the interest rate, so that income must rise to maintain equilibrium in the money market.
Suppose a country with a fixed exchange rate decides to implement a devaluation of its currency and commits to maintaining the new fixed parity. This implies (A) ______________ in the demand for its goods and a monetary (B) _______________.
Group of answer choices
(A) expansion ; (B) contraction
(A) contraction ; (B) expansion
(A) expansion ; (B) expansion
(A) contraction ; (B) contraction
Assume a small open country under fixed exchanges rate and full capital mobility. Prices are fixed in the short run and equilibrium is given initially at point A. An exogenous increase in public spending shifts the IS curve to IS'. Which of the following statements is true?
Group of answer choices
A new equilibrium is reached at point B.
The TR curve will shift down until it passes through point B.
A new equilibrium is reached at point C.
Point B can only be reached in the absence of capital mobility.
Chapter 13 Solutions
EBK MACROECONOMICS (FOURTH EDITION)
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Similar questions
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