Small open economy with a floating-exchange-rate system

Assignment Help Microeconomics
Reference no: EM13695958

You are the chief economic adviser in a small open economy with a floating-exchange-rate system. Your boss, the president of the country, wishes to increase the level of output in the short run in order to win re-election.

a) Do you recommend using expansionary or contractionary, monetary or fiscal policy? (Choose one) Use the Mundell-Fleming model to illustrate graphically your proposed policy and explain why you chose fiscal or monetary policy.

b) What if your country has a fixed exchange rate, what is the only policy mix that can be implemented? Explain why and show in Mundell model.

Reference no: EM13695958

Questions Cloud

Government spends more on a missile defence program : Suppose that the government spends more on a missile defence program. How does this affect aggregate demand, aggregate output, prices, and employment in the short run? How is your answer affected by the presence of the multiplier, or an increase in t..
Long-run aggregate supply than on aggregate demand : How will output and inflation in both the short run and the long run be affected if the effects of the tax cuts are stronger on long-run aggregate supply than on aggregate demand?
find the output and profit for each in a nash equilibrium : An industry contains two firms, one whose cost function is c(y1)=y1^2 and another whose cost function is c (y2)=30y^2. The demand function they face is p=(120-(y1+y2)) a) find the output and profit for each in a nash equilibrium. b) Find total output..
Define the general concept of market structure : Define the general concept of market structure and analyze the four primary market models (pure competition, monopoly, monopolistic competition, and oligopoly.) Select a specific industry or industries that characterize each model and elaborate on th..
Small open economy with a floating-exchange-rate system : You are the chief economic adviser in a small open economy with a floating-exchange-rate system. Your boss, the president of the country, wishes to increase the level of output in the short run in order to win re-election.
What is amount of its economic profits at this output level : Suppose that a perfectly competitive firm faces a market price of $7 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curveat an output level of 1,400 units. If the firms produces 1..
Policies do to the budget deficit and the national debt : The economy has been suffering through a recession for over a year and the government is desperate for solutions. Elections are coming up and the current administration is in danger of being replaced if something isn’t done to stimulate the economy f..
Is this rule based policy pro-cyclical or countercyclical : Draw an AD/AS graph and a money market graph side-by-side. For the money market, use an upward sloping money supply curve and assume that the equilibrium interest rate in the money market is 5%.
Monetary transmission mechanism : Monetary Transmission Mechanism: According to the Keynesian school, show what happens, step by step, when the Federal Reserve sells US treasury bills to US banks. What is the difference between the Keynesian view and Monetarist/Rational Expectations ..

Reviews

Write a Review

 

Microeconomics Questions & Answers

  Implementation of monetary policy and federal reserve

Determine what type of monetary policy has the Federal Reserve been using for the last year easy or expansionary, tight or contractionary, or neutral or non-involvement)?

  Discussion on the federal government

Suppose as your company's lobbyist, what would you like to see done through Federal government that would be of help to your company? This could be what government could do or what they could stop doing this.

  What is the income elasticity of these groups of goods

Researchers have found that during the last recession, when income fell by 6 percent, many fast-food restaurants saw their sales increase by 8 percent while the sales of soda fell by 12 percent in grocery stores.

  Why does the economy fall to pieces after a financial crisis

Why Does the Economy Fall to Pieces after a Financial Crisis - Prepare a powerpoint presentation talking about the document and also prepare an essay paper summarazing the article.

  Why the previous interest rate is no longer sustainable

What is the basic determinant of (a) the strength of the transactions demand for money (the location of the transactions demand for money curve) and (B) the amount of money demanded for assets, given a particular asset demand for money curve

  Sum of discretionary and nondiscretionary expenditures

What would be true of entitlement spending if the percentage of taxes allocated to discretionary spending rose to 100 % and the federal budget was balanced? (Hint: Under a balanced budget, tax revenues equal the sum of discretionary and nondiscretion..

  What are some of the ramifications of our decisions

Should we treat capital investments differently or all the same? More specifically should we encourage certain types of capital investments? Why? What are some of the ramifications of our decisions?

  Especially perceptible in the health insurance markets

Opportunism in health care is especially perceptible in the health insurance markets. Consider the area in which you live, specifically your state and local communities. Evaluate the social-cultural issues that are influencing adverse selection in in..

  Although new york state is second only to washington state

although new york state is second only to washington state in production of apples its production has been declining

  Question 1 a consider the market represented by the

question 1 a consider the market represented by the schedule in the table below.i draw a diagram. what is the

  Explaining business strategy

Give an example of how you would use this information to set the price for your product in the market place and explain one factor in detail about how shifting demand and supply curves makes market demand estimation difficult

  Equilibrium how do you illustrate equilibrium price in

how do you illustrate equilibrium price in resource market and good market.the answer should be very detaildescribing

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