Perspective of macroeconomic policy implications

Assignment Help Business Economics

Reference no: EM131196065

The following questions are based on fixed exchange rate and/or flexible exchange rate regime from the perspective of macroeconomic policy implications in an open macroeconomic model. The answers must be written in your words along with graphical illustration, if appropriate. Without explaining in your words, the graphical illustration alone will not be credible. Also make sure you use the relevant symbols and notation on each of the lines and axis on the graph(s) to clearly indicate the working mechanism of variables.

Assume a country is in a fixed exchange rate regime such as China. Explain what factors mightcause individuals to expect that a country will devalue its currency. Explain the various actions that policy makers can choose in response to this expected devaluation.

Hint: As part of your answer, you may give the example of the most recent (Aug 11 and 12, 2015) devaluation of Chinese currency (Yuan or Renminbi) by more than 2% against its major composite currency index.

Reference no: EM131196065

Questions Cloud

Assume a country is in fixed exchange rate regime : The following questions are based on fixed exchange rate and/or flexible exchange rate regime from the perspective of macroeconomic policy implications in an open macroeconomic model. Assume a country is in a fixed exchange rate regime such as China...

What must occur for interest parity condition to be restored : The following questions are based on fixed exchange rate and/or flexible exchange rate regime in an open macroeconomic model. The answers must be written in your words along with graphical illustration. Suppose the domestic and foreign interest rates..

Explain what effect an increase in government spending : Using the ZZ/Y and NX graphs, illustrate graphically and explain what effect an increase in government spending will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibria

Desired level of output and is experiencing trade deficit : Suppose the national output in the US is below the policy makers' desired level of output and is experiencing a trade deficit. Assume that the policy makers' goals are to achieve the desired level of output (i.e., full employment output) and balanced..

Perspective of macroeconomic policy implications : The following questions are based on fixed exchange rate and/or flexible exchange rate regime from the perspective of macroeconomic policy implications in an open macroeconomic model. Assume a country is in a fixed exchange rate regime such as China...

Manager make more money under the new payment scheme : Recently, the owner of a Trader Joe’s franchise decided to change how she compensated her top manager. Last year, she paid him a fixed salary of $50,000 and her store made $115,000 in profits. Assuming the change in compensation is the reason for the..

Indifferent between the two payment schemes : Describe how a manager who derives satisfaction from both income and shirking allocates a 10-hour day between these activities when paid an annual, fixed salary of $115,000. which of the compensation schemes does the manager prefer? The scheme with f..

Interest parity condition holds and domestic interest rate : Suppose the interest parity condition holds and that the domestic interest rate is greater than the foreign interest rate. What does this imply about the current versus future expected exchange rate? Explain. Suppose the one-year nominal interest rat..

Buyers are willing to purchase and the quantity available : Create a supply and demand graph in Excel that demonstrates the relationship between the amount buyers are willing to purchase and the quantity available. You may select your own data points, but you must discuss the relationship between supply and d..

User Account

All Pages