Illustrate the effects of the temporary shock

Assignment Help Microeconomics
Reference no: EM13702514

1. For each of the following situations, use the IS-LM-FX model to illustrate the effects of the temporary shock and the policy response. (Note: Assume the government responds by using monetary policy to stabilize output.) For each case, state the effect of the shock on the following domestic variables (increase, decrease, no change, or ambiguous): Y , i, E, C, I, T B. Assume a flexible
exchange rate.
a All else equal, there is an increase in the foreign interest rate.
b All else equal, the real demand of money falls.

2. For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock. For each case, state the effect of the shock on the following domestic variables (increase, decrease, no change, or ambiguous): Y , i, E, C, I, T B. Assume a fixed exchange rate.
a All else equal, the real demand of money falls.
b All else equal, there is a decrease in taxes.

3. The Chinese Renminbi was pegged to the USD before July 2005. Using the IS-LM-FX model for Home (China) and Foreign (US), illustrate how a decrease in G in China before July 2005 affected the following Chinese variables (increase, decrease, no change, or ambiguous): Y , i, E, C, I, T B. Do not forget to use a diagram to support your answer. For the purposes of this problem assume international capital mobility.

Reference no: EM13702514

Questions Cloud

The turbine of a large gas turbine engine receives gas : The turbine of a large gas turbine engine receives gas from the combustion chamber at 5 MPa, 900C and 110m/s. At the turbine outlet, gas exits at 100kPa, 140C with a velocity of 60m/s. If the power output from the turbine is 5000kW, what is the mass ..
Consider a cold air-standard diesel cycle : Consider a cold air-standard Diesel cycle. At the beginning of the compression process, the pressure is 0.1 MPa, the temperature is 320 K, and the volume of air is 0.02 m3. The maximum temperature of the cycle is 1500 K, and the compression ratio is ..
Are the banks utilizing their full lending capacity : Assume the banking system contains the following amounts: Total reserves $80billion Transactions deposits $800billion Cash held by public $100billion Reserve requirement .10
A helical compression spring is wound : A helical compression spring is wound using QQ&T A229 wire. The spring is needed to support a 25-lbf load after being compressed 1.5 in. Because of assembly considerations, the solid height cannot exceed 1.5 in and the free length cannot be more than..
Illustrate the effects of the temporary shock : Use the IS-LM-FX model to illustrate the effects of the temporary shock and the policy response. (Note: Assume the government responds by using monetary policy to stabilize output.) For each case, state the effect of the shock on the following dom..
What is the net heat transfer for the entire process : Humid air is to be conditioned in a constant pressure process at 1 atm from 39C dry bulb and 50 percent relative humidity to 17C dry bulb and 10.8C wet bulb. The air is first passed over cooling coils to remove all the moisture necessary to achieve t..
Examine the criticality of timely information : Examine strategies for decision-making based on quantitative models and examine the criticality of timely information.
Volume of the cylindrical vessel of radius : Consider a spherical shell of radius r and thickness t. Assuming Young’s modulus E to be known, nd the change in the volume of the shell due to internal pressure p. Find the change in the volume of the cylindrical vessel of radius r, length l and thi..
Consider a cascade system : Consider a cascade system that uses Carnot refrigeration for the high temperature cycle, and vapor compression refrigeration for the low temperature cycle. Saturated vapor ammonia enters the compressor in the low temperature cycle at 20 psi and exits..

Reviews

Write a Review

 

Microeconomics Questions & Answers

  Workers are compensated by firms with benefits in addition

Workers are compensated by firms with “benefits” in addition to wages and salaries. The most prominent benefit offered by many firms is health insurance

  Compute opportunity loss or regret matrix which decision

sampb manufacturing inc. a manufacturer of packaging products is attempting to select a short run strategy which

  Demand and supply curve for clay fire

Redstone's manager is fired, and you are now the manager of Redstone Clayworks. How many fire pits would you choose to produce and why?

  In a competitive industry the market-determined price

In a competitive industry the market-determined price is $12. A firm is currently producing 50 units of output; marginal cost is $15, average total cost is $10 and average variable cost is $7. In order to maximize profit, the firm should:

  Discriminating pure monopolist must decrease price

The non discriminating pure monopolist must decrease price on all units of a product sold in order to sell more units.

  Steps followed in a civil litigation before the trial begins

Which of the following statements is true about the steps followed in a civil litigation before the trial begins?

  Describe whether your ideas regarding the effectiveness

The impact of Alfred Marshall on economics has been profound; write a short biography (1 page) with sources that outlines his contributions to the field.

  An effective treatment for migraine headaches

An effective treatment for migraine headaches.

  Do you think that nafta has forced the us economy

Do you think that NAFTA has forced the US economy to reallocate its resources to more capital intensive goods? If so, what would be the long term impact on economic growth?

  Determine the marginal rate of substitution mrs and why

what is the marginal rate of substitution mrs and why does it diminish as the consumer substitutes one product for

  Principle of marginal benefit and marginal cost

Mark discovers that he needs to do an additional $200 of work to make the cabinet worth $360 topotential buyers. He could also sell the cabinet now, without completing theadditional work, for $100. What should he do?

  What should it do to interest rates

Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd