Economics Today: The Macro View (19th Edition) (Pearson Series in Economics)
19th Edition
ISBN: 9780134478760
Author: Roger LeRoy Miller
Publisher: PEARSON
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Chapter 9, Problem 8P
To determine
The Real
Concept introduction:
Real GDP per capita is the measurement of total economic output of any country divided by the population of that country. It is adjusted for inflation and is helpful in comparing the standard of living between two or more countries and also between two periods of time of the same country. It indicates the
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This question examines the relationship between the Indian rupee (Rs) and the US dollar ($). We
denote the exchange rate in rupees per dollar as ERS/$. Suppose the Bank of India permanently
decreases its money supply by 4%.
1. First, consider the effect in the long run. Using the following equation, explain how the change
in India's money supply affects the Indian price level, PIN, and the exchange rate, ERS/$:
AERS/STIN
ERS/$
-
·TUS = (MIN - 9IN) - (Mus - gus).
MIN
2. How does the decrease in India's money supply affect the real money supply,
in the long
PIN
run.
3. Based on your previous answer, how does the decrease in the Indian money supply affect the
nominal interest rate, UN, in the long run? (hint: M = L(i)Y hold in the long run)
4. Illustrate the graphs to show how a permanent decrease in India's money supply affects India's
money and FX markets in the long run. (hint: you may refer to the figures on lecture slides #5,
titled "Analysis in the long run.")
5. Illustrate the…
Please explain the concept/what this fill in graph, thanks
Chapter 9 Solutions
Economics Today: The Macro View (19th Edition) (Pearson Series in Economics)
Ch. 9 - Prob. 9.1LOCh. 9 - Prob. 9.2LOCh. 9 - Prob. 9.3LOCh. 9 - Prob. 9.4LOCh. 9 - Prob. 9.5LOCh. 9 - Prob. aFCTCh. 9 - Prob. bFCTCh. 9 - Prob. cFCTCh. 9 - Prob. dFCTCh. 9 - Prob. 1CTQ
Ch. 9 - Prob. 2CTQCh. 9 - Prob. 1FCTCh. 9 - Prob. 2FCTCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - Prob. 8PCh. 9 - Prob. 9PCh. 9 - Prob. 10PCh. 9 - Prob. 11PCh. 9 - Prob. 12PCh. 9 - Prob. 13PCh. 9 - Prob. 14PCh. 9 - Prob. 15PCh. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20P
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