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Q. Exercise 1Graphically represent on the IS/LM/FX diagram the effects of the following cases; use a new diagram for each case and do not forget to label the axes and the curves. Start from an initial equilibrium point 0 and clearly show which curve(s) would shift. Label the intermediate equilibrium points sequentially 1, 2, etc. until the ...final equilibrium is reached.1. The Federal Reserve implements an expansionary monetary policy. Exchange rate is flexible.2. The expected exchange rate falls. Exchange rate is ‡flexible.3. The expected exchange rate falls. Exchange rate has to be kept ...fixed now.4. Government spending G is reduced. Exchange rate is ...fixed.5. The government implements a tax cut. Exchange rate is ‡flexible.
Exercise 2Represent graphically the effects of an expansionary monetary policy and a contraction fiscal policy in the IS/LM/FX model. Describe how the open economy channel interacts with the implementation of the policy and explain the differences between the open and closed economy versions of the model in terms of policy outcomes. In particular, say whether the change in income is larger in open economy or in closed economy. Be as specific as possible in describing and representing the effects of each policy.
Exercise 3What would you do in each of the following scenarios? Use the IS/LM/FX representation.1. The liquidity preference of people increase. What should the Central Bank do to keep the real exchange rate peg?2. The central bank thinks that the exchange rate is over-appreciated.3. A negative shock to the demand of goods makes the output fall. The government wants to close the recessionary gap.4. A negative shock to the demand of goods makes the output fall but the central bank has to keep the exchange rate peg.5. The Government implements an expansionary fiscal policy, but the exchange rate is fixed. How does the Central Bank respond to reestablish the peg?
If a person can either fish or chop coconuts for subsistence, what does production look like.
The CFO for a corporation deliberately misstates expenses on the income statement purely out of a sense of loyalty to his CEO and the company.
Please try to come up with real examples: it's not enough to say which savings account decreased.
Illustrate what are the five specific events that can be expected to cause the equilibrium price of ice cream to increase.
Projects A requires an initial outlay of $1000 and yields $41200 in 4 year's time. Project B requires an outlay of $30 000 and yields $35 000, after 4 years. Which of these projects would you choose to invest in when market rate is 3 percent."
Assume there is a simultaneous increase in government expenditure also reduction in the funds provide.
Assume there are two firms in a market who each simultaneously choose a quantity.
On the same day, the San Francisco Chronicle had an article with the headline "Sharp Drop in Bay Area Home Sales"
Assume that a firm employs labor and capital by paying $40 per unit of labor employed and $200 per hour to rent a unit of capital. What is the firm's optimal combination of capital and labor?
How are the depopulation of Whales worldwide and Congested Highways similar in terms of economics? What are some possible solutions to both?
Using your answers above, why does the growth rate of real GDP differ depending on the base year? Explain how the technique of Chain-Weighted Real GDP alleviates this problem.
After 25 years explain how much larger is Country B's economy the Country A's economy. Why is the answer not 25 percent.
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