What would happen to aggregate income and the exchange rate

Assignment Help Finance Basics
Reference no: EM131145145

Assume that the price level is fixed in the short run, both at home and abroad. This means that the nominal exchange rate e equals the real exchange rate. Use the Mundell-Flemming model to predict what would happen to aggregate income and the exchange rate under both floating and fixed exchange rates in response to each of the following shocks.

a. A fall in consumer confidence about the future induces consumers to spend less and save more

b. The introduction of a stylish line of Toyotas makes some consumers prefer foreign cars over domestic cars.

Reference no: EM131145145

Questions Cloud

Which level indicate the point of maximum economic efficieny : Which level indicates the point of maximum economic efficiency? Which of the following statements best represents a difference between short-run and long-run cost?
Operating activities section of the statement of cash flows : Prepare the operating activities section of the statement of cash flows using the indirectmethod.
Describe the effects on a person : Pick a neurotransmitter. Then, describe the effects on a person who has too much or too little of this neurotransmitter, for two of the categories below. For example, a person who has too much adrenaline might be aggressive and have an elevated he..
Will the insurance company provide free lojacks : What is the threshold number of insurance companies the number at which each insurance company will be indifferent about providing free LoJack systems?
What would happen to aggregate income and the exchange rate : a. A fall in consumer confidence about the future induces consumers to spend less and save more b. The introduction of a stylish line of Toyotas makes some consumers prefer foreign cars over domestic cars.
The income statement of mazor company is presented : Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2012, for Mazor Company, using the indirect method.
Explain why each of the six effects occurs : Compare the changes in drug reactivity that are noted in tolerance and sensitization. Explain why each of the six effects occurs. Specifically, what are the chemical behaviors of the drug that cause the effect on the synaptic transmission?
What do you think went wrong in terms of the four main steps : What do you think went wrong in terms of the four main steps in the control process? Refer to the four steps in the control process discussed on pages 237-238 in Bhattacharyya (2009) or pages 234-236 of Jeyarathmm (2008).
Explain the formation of stereotypes : According to the textbook, fundamental attribution error occurs when we focus less on the situation we are in and more on personal characteristics to describe behavior. Provide one (1) example of the primary manner in which situational and disposi..

Reviews

Write a Review

Finance Basics Questions & Answers

  Organizational characteristics of nonprofit-for-profit

Write a 350- to 700-word paper in which you contrast nonprofit and for-profit businesses. Include the following points: Organizational characteristics of nonprofit and for-profit organizations

  Future value than an ordinary annuity

Why does an annuity due always have a higher future value than an ordinary annuity? Use a specific example to support your response.

  Future value of the annual savings

Beverly and Kyle Nelson currently insure their cars with separate companies paying $650 and $575 a year. If they insure both cars with the same company, they would save 10 percent on the annual premiums. What would be the future value of the annua..

  Using the 3-month moving average predict fund price for

mary hernandez has invested in a stock mutual fund and she is considering liquidating and investing in a bond fund. she

  What will be the property debt coverage ratio

The loan carries an 8 percent fixed contract rate, amortized monthly over 25 years with a 10-year term. What will be the property's (annual) debt coverage ratio in the first year of operations? Please show all steps of the calculation.

  How do standard accounting principles help financial

how do standard accounting principles help financial markets work more

  The estimated economic life of the machine

On January 1, Year 8, Von Company entered into two non-cancellable leases of new machines for use in its manufacturing operations. The first lease does not contain a bargain purchase option, and the lease term is equal to 80% of the estimated economi..

  Explain what were some of the credit risks that arose

What were some of the credit risks that arose from the 2008 financial crisis. How were banks affected by the credit risks. How were individuals and businesses affected by the credit risks

  Time value of money are saving for the college education

Time Value of Money You are saving for the college education of your two children. They are two years apart in age, one will begin college 15 years from today and the other will begin 17 years from today. You estimate your children's college expenses..

  What are corporate control events what are the restrictions

what are corporate control events? what are the restrictions faced by corporate insiders during corporate control

  Delphi technique in risk management

Assume you are bullish on Stock X and instruct your broker to buy 1,000 shares on margin, with a margin of 60 percent. The current price of a share of Stock X is $30, the interest on loans is 5 percent and discuss the Delphi technique in risk managem..

  Ae fixed assets potentially includable in current assets

are fixed assets potentially includable in current assets? explain. if your answer is yes describe situations where

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