14. Today many Central Banks around the World are thinking of Increasing interestrates. Why? What could be the dangers of increasing those interest rates toomuch?15. What will happen to the trade balance and the real exchange rate of a smallopen economy when govenment purchases increase, such as during a war?Does your answer depend on whether this is a local war or a global war? Onthose grounds, In the current situation of the Russian invasion, what shouldhappen between the dollar and the Euro?

Answered: 14. Today many Central Banks around the…

14. Today many Central Banks around the World are thinking of increasing interest rates. Why? What could be the dangers of increasing those interest rates too much?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter31: The Impacts Of Government Borrowing

Section: Chapter Questions

Problem 2SCQ: Assume an economy has a budget surplus of 1,000, private savings of 4,000, and investment of 5,000....

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Question

14. Today many Central Banks around the World are thinking of Increasing interest
rates. Why? What could be the dangers of increasing those interest rates too
much?
15. What will happen to the trade balance and the real exchange rate of a small
open economy when govenment purchases increase, such as during a war?
Does your answer depend on whether this is a local war or a global war? On
those grounds, In the current situation of the Russian invasion, what should
happen between the dollar and the Euro?

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