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The following questions are based on fixed exchange rate and/or flexible exchange rate regime from the perspective of macroeconomic policy implications in an open macroeconomic model. The answers must be written in your words along with graphical illustration, if appropriate. Without explaining in your words, the graphical illustration alone will not be credible. Also make sure you use the relevant symbols and notation on each of the lines and axis on the graph(s) to clearly indicate the working mechanism of variables. a. Assume a country is in a fixed exchange rate regime such as China. Explain what factors might cause individuals to expect that a country will devalue its currency. Explain the various actions that policy makers can choose in response to this expected devaluation. Hint: As part of your answer, you may give the example of the most recent (Aug 11 and 12, 2015) devaluation of Chinese currency (Yuan or Renminbi) by more than 2% against its major composite currency index. b. Assume a country is in a fixed exchange rate regime. Now suppose that individuals expect that policy makers will devalue its currency. Explain the various actions that policy makers can choose in response to this expected devaluation. c. Suppose the economy is operating below the natural level of output. Discuss the arguments for and against using devaluation in such a situation. d. Suppose the economy is initially operating above the natural level of output. In a fixed exchange rate regime, explain how the economy will adjust to this situation.
A city is spending $20 million on a new sewage system. The expected life of the system is 40 years, and it will have no market value at the end of it life. Operating and maintenance expenses for the system are projected to average $0.6 million per ye..
According to the text privatization is "arranging for private companies to on certain jobs and functions formerly done by government." (Burger, 15) Many of these private companies save money by hiring non union workers. These private companies do thi..
How do these readings expand your understanding of Buddhism and Islam? What did you find surprising in the way religion is practiced “on the ground” as opposed to reading about its theoretical practice
Explain why does the profit motive does not automatically avoid air pollution in the production of steel and other products.
Principle theory of management. Where does the Coast Guard fit into the mix? What are the classes of crimes? Why does the security manager need to understand them?
What are some of the key similarities and differences between the first and second waves of globalization? Elaborate your answer by referring to increasing economic openness, growing economic interdependence and deepening economic integration in the ..
The mission must comprise APA format references on the final slide and in-text references on the slide where information is presented.
Assume a US saver with $1,000 to place in a domestic or European bank CD. The interest rate for US and European savings equals 4%. If the saver keeps her money in the US, her return equals ____. If the saver moves her money to Europe with a forward t..
Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries?
The respective forecasts were 120 for all four years. Illustrate what is the resulting MAD value that can be computed from this data.
Suppose China wishes to peg the Chinese Yuan to the US dollar at $0.20/Yuan. But, because of foreign funds flowing into China, the Yuan appreciates. How can the People’s Bank of China (China’s central bank) maintain the pegged exchange rate? Is the B..
Graph the residuals e against the values of the explanatory variable x and look for any discernible pattern. (b) Which assumption(s) is being violated? Discuss its consequences and suggest a possible remedy. (c) List the three OTHER common violations..
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