Economy is operating below the natural level of output

Reference no: EM13686118

a. Suppose a country is in a fixed exchange rate regime such as China. Describe what factors might cause individuals to expect that a country will revalue its currency. Describe the various actions that policy makers can choose in response to this expected revaluation.

b. Suppose a country is in a fixed exchange rate regime. Now suppose that individuals expect that policy makers will devalue its currency. Describe the various actions that policy makers can choose in response to this expected devaluation.

c. Presume the economy is operating below the natural level of output. Discuss the arguments for and against using devaluation in such a situation.

d. Presume the economy is initially operating above the natural level of output. In a fixed exchange rate regime, describe how the economy will adjust to this situation.

Reference no: EM13686118

Questions Cloud

Most serious flaw in the medicare system is the fact : Possibly, the most serious flaw in the Medicare system is the fact that

Falling hospital admissions-shorter length of hospital stays : Falling hospital admissions and shorter length of hospital stays beginning in the mid 1980s may be attributable to

Fee schedule based on diagnosis-related groups sets up : A fee schedule based on diagnosis-related groups sets up an incentive to

Substantial decrease in the amount of garbage : Many cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a tax on each household to pay for the pickup to charging a fee for each bag or can picked up. Would this have been the resul..

Economy is operating below the natural level of output : Suppose a country is in a fixed exchange rate regime. Now suppose that individuals expect that policy makers will devalue its currency. Describe the various actions that policy makers can choose in response to this expected devaluation. Presume the e..

Identify the levels in the file hierarchy : Identify the levels in the file hierarchy and identify the order in which the directories need to be created and identify the commands used for creating the file hierarchy.

Since economists do not favour trade restrictions : Since economists do not favour trade restrictions, and this is a course in Managerial Economics, make the case as an economist against trade restrictions for Infant Industries. Are there any arguments for trade restrictions that most economists would..

Fiscal policy problem : "Fiscal Policy" Please respond to the following: Decide what fiscal policy measure has a more direct impact to the economy, an increase in government spending or an equal decrease in taxes if customer confidence is lower than the previous month.

Why is the use of system development methodologies : Why is the use of system development methodologies

User Account

All Pages