Operating under a fixed exchange rate regime

Assignment Help Business Economics
Reference no: EM13982285

Assume that an open economy Neverland is operating under a fixed exchange rate regime. Currently, Neverland’s economy is suffering a deep economic recession meaning that Neverland’s total output level is much lower than its medium-run output level. Neverland’s government is discussing how to bring the economy back to its medium-run output level. One side argues that the government should devaluate the currency; while the other side argues that the market itself will bring Neverland’s economy to its medium-run equilibrium.

a) Use an appropriate economic model to illustrate and explain the different policies mentioned above.

b) Discuss the main pros and cons of each policy option.

Reference no: EM13982285

Questions Cloud

What is the quantity supplied of the good : For Question 1-8, consider a competitive market for a good where the demand curve is determined by the demand function: P=5-QD and the supply curve is determined by the supply function: P=QS. Where P stands for Price, QD is quantity demanded and ..
What are the issues governing facility site selection : A number of trends in today's logistics environment have a significant effect on decisions involving facility location. What are the issues governing facility site selection?
Marginal benifit curve to carbon emission reductions : If the marginal benifit curve to carbon emission reductions is relatively flat (relative to the cost curve), explain why a tax might be preferable to a cap-and-trade system
What is the natural rate of unemployment for this economy : Suppose that an economy in year t can be described by the following three equations: What is the natural rate of unemployment for this economy in year t? Suppose that in year t-1 and year t the unemployment rate is equal to the natural rate and that ..
Operating under a fixed exchange rate regime : Assume that an open economy Neverland is operating under a fixed exchange rate regime. Currently, Neverland’s economy is suffering a deep economic recession meaning that Neverland’s total output level is much lower than its medium-run output level.
Clintion nature perserve influance on enviromental polices : Discuss your Clintion nature perserve influance on enviromental polices for this week and share what you learned about your issue.
Self-analysis of your development : Your assessment will include self-analysis of your development as an interprofessional collaborative worker incorporating leadership skills required for effective collaborative practice.
What is the net electric flux on the surface : The electric field is measured all over the surface of a cylinder whose diameter is 8 cm and whose height is 20 cm, as shown in the diagram. What is the net electric flux on this surface?
How much charge is inside the surface : The electric field is measured all over the surface of a cylinder whose diameter is 8 cm and whose height is 20 cm, as shown in the diagram. How much charge is inside the surface?

Reviews

Write a Review

 

Business Economics Questions & Answers

  Federal government consider when evaluating the rising cost

Find the equilibrium price also quantity, then find elasticity of demand. Which should the federal government consider when evaluating the rising cost of college.

  What is the current quantity and profit or loss

A firm in Perfect Competition has a Total Cost Function: TC = 6Q^2 - 8Q + 12 with a current P=$6. What is the current Quantity and Profit or Loss? Will firms enter or leave the industry? What will be the long run Price and Quantity?

  Banking system leads to an increase in fed funds rate

Which of the following is a rate that should theoretically serve as a floor for the Fed funds rate? A dealer is said to be running a "matched book" if. An increase in the supply of reserves in the banking system leads to an increase in the Fed funds ..

  Approach in international marketing and advertising

What is the programmed management approach in international marketing and advertising? How are Kraft Heinz, P&G, Nestle and Starbucks are handing this?

  How do entities determine their fiscal period

How do entities determine their fiscal period? Give an example. How would you define a highly leveraged company? What ratio would you use to determine this? Tell me one thing you learned from the guest lecture, and how do you think it may be useful f..

  What factors besides income influence work decisions

Would you continue to work after winning a lottery prize of $50,000 a year for life? Would you change schools, jobs, or career objectives? What factors besides income influence work decisions?

  Summary of how the united states and the othercountry differ

Write a summary of how the United States and the other country differ. Which of the two countries has better prospects for the future and why? Provide a reasoned opinion.

  Makes adopting-implementing common macroeconomic policies

What (what circumstances) makes adopting and implementing common macroeconomic policies (monetary, exchange rate) challenging in a Common Market area.

  What circumstances would monopolistic firm

Under what circumstances would a monopolistic firm be economically more efficient than a group of small, competitive firms? If there are such monopolies, what are the drawbacks and how could they be corrected?

  Q1 demand for a product of a monopoly is given as q100-2pa

q1. demand for a product of a monopoly is given as q100-2p.a graph demand and marginal revenue of the firm.b find the

  Terms of the nature and dimensions of the problems

Suppose you are appointed head of the energy department of the city or town where you grow up, and you are asked to come out with a sustainable long-term strategy that that will carry your city into the middle of the century. What are the three bigge..

  Annual sales of an energy saving device

It is estimated that the annual sales of an energy saving device will be 20,000 the first year and increase by 10,000 per year until 50,000 units are sold during the fourth year. Proposal A is to purchase manufacturing equipment costing $120,000 with..

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