Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The exchange rate as an automatic stabilizer
Consider an economy that suffers a fall in business confidence (which tends to reduce investment). Let UIP stand for the uncovered interest parity condition.
a. Suppose the economy has a flexible exchange rate. In an IS-LM-UIP diagram, show the short-run effect of the fall in business confidence on output, the interest rate, and the exchange rate. How does the change in the exchange rate, by itself, tend to affect output? Does the change in the exchange rate dampen (make smaller) or amplify (make larger) the effect of the fall in business confidence on output?
b. Suppose instead the economy has a fixed exchange rate. In an IS-LM-UIP diagram, show how the economy responds to the fall in business confidence. What must happen to the money supply in order to maintain the fixed exchange rate? How does the effect on output in this economy, with fixed exchange rates, compare to the effect you found for the economy in part (a), with flexible exchange rates?
c. Explain how the exchange rate acts as an automatic stabilizer in an economy with flexible exchange rates.
Bob and Dexter share a dorm room. Bob is a smoker but Dexter does not smoke. There are no laws that prohibit smoking in the dorm rooms. The benefit of smoking is worth $250 to Bob, but the smoke imposes a $500 cost on Dexter.
what allows companies to distribute the same prescirption drug for two different prices Why dont competitiors under cut their price in the Western countries (i.e. United States)
Suppose the consumer has $100 to spend on consumptionnow (c1) or consumption next year (c2). Any money not spent now can be deposited in a bank account, accumulating interest at an annual rate of 10%, and then withdrawn for spending next year. The..
The manager of a firm estimates that the sales of her firm are related to radio and newspaper advertising in the following way: S = 12,000 + 1,800AR, where S = the number of units sold, A = the number of quarter-page newspaper advertisements, and ..
Who does Graeter's consider as the company's real competition? Do you agree or disagree withhis assessment? Explain why or why not.
Suppose a competitive market consists of identical firms with a constant long-run marginal cost of $10. There are no fixed costs in the short run or long run. Suppose the demand curve is given by Q(P) = 1000-p
Suppose that technophiles are willing to pay $400 now for the latest iphone, but only $300 if they have to wait a year. Normal people are willing to pay $250 and their desire to purchase doesn't vary with time. Ignore the time value of money
What replacement analysis technique can be used in this case? When should the drill press be replaced with the new drill press having EUAC of $7000?
A firm uses capital and labor to produce output according to the production function q = 4pKL, for which MPL = 2 p K=L and MPK = 2 p L=K. a. If the wage w = $4 and the rental rate of capital r = $1, what is the least expensive way to produce 16 unit..
(The Human Body and the U.S. Economy) Based on your own experiences, extend the list of analogies between the human body and the economy as outlined in this chapter. Then, determine which variables in your list are stocks and which are flows.
Your firm produces clay pots entirely by hand even though a pottery machine exists that can make clay pots faster than a human. Workers cost $80 per day and each additional worker can produce 20 more pots per day
What are the implications of these trends for managerial decision making in the copper industry?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd