15. In the short run the a. b. C. set by the central bank can affect investment because Nominal exchange rate; Money supply is constant Inflation rate; The real interest rate is constant Price level; Money supply is constant d. Nominal interest rate; Inflation is sticky e. Money growth rate; Prices are flexible
Q: In the long-run, aggregate production is determined by the side of the economy while in the short…
A: Investment is function of rate of interest and expected profitability accounting to Keynes.
Q: Use a Keynesian model to calculate the answer. Full employment output Investment Autonomous…
A: Aggregate expenditure in two sector economy is consists of consumption and investment. This means…
Q: Poor infrastructure is a major deterrent to economic growth. True Fals
A: Economic growth is crucial because higher average salaries allow for more consumption of products…
Q: Consider three alternatives A, B, and "do-nothing." (a) Graph the NPW for the alternatives and…
A: Net Present Worth (NPW) is the value difference between the present worth of cash inflows and the…
Q: One for the unitary model, Samuelson's Consensus Model (1956) & the Non-unitary model for the…
A: A single economic agent chooses behaviors that optimize his or her utility function while keeping a…
Q: #Question 2 explain with deatils 2. A dozen (12) eggs cost $0.90 in January 1980 and $2.50 in…
A: Inflation rate between year 1 and 2 = (Price index in year 2 - Price index in year 1) / price index…
Q: Plan A • Consumption up to 1,000 coconuts taxed at 50%. • Consumption higher than 1,000 coconuts is…
A: A progressive tax is a tax wherein the tax rate increases as the taxable amount increases. The term…
Q: 3. Now describe the anticipated impacts of the Biden Covid Bill. Remember, the focus is only on one…
A: The Covid Bill of President B is one of the biggest fiscal stimulus package that is injected in the…
Q: Assume that supply for replacement mobile phone batteries in the Australian domestic market is given…
A: Given Domestic inverse supply function: P=9+0.00001Qs ......(1) Inverse demand function:…
Q: What is the major objective of monetary policy in the US economy?
A: Monetary policy, which is set by the nation's central bank, aims to regulate the total amount of…
Q: Problem 2. (SW 12.8.) Consider a product market with a supply function Q₁ = B₁ + B₁P₁ + už, a demand…
A: Given information Qd=γ0+μdiQs=β0+β1+Pi+μsi
Q: The government has announced a cut to stamp duty, the tax paid when people buy a property in England…
A: Demand refers to the amount of a good that a consumer is willing as well as able to buy at a given…
Q: In the monetary intertemporal model, assume that money supply is always fixed. Suppose that there is…
A: Since multiple questions have been posted, we will answer the first question. If you want any…
Q: 3. The ABC exporting Company quoted a price USD 800 M/T CIFC2% Mumbay. If the freight costs is USD…
A: Products made in one country and purchased by citizens of another are considered exports. When local…
Q: So is this an example of: hometheic preferences, quasilinear preferences, or revealed preferences?
A:
Q: ما نا نا منا A Which of the graphs illustrates a decrease in supply D 1 poin
A: "Relationship between price of a commodity and quantity supplied of that commodity is shown by a…
Q: Omari's HookNLadder is the only company selling fire engines in the fictional country of…
A: Demand refers to the quantity that a consumer wishes to buy at a given price in a given period of…
Q: O b. The combination of deposit taking and lending with securities underwriti O c. The combination…
A: The Glass Steagall Act of country U was implemented in 1933 after the Great Depression of 1929. The…
Q: (c) If the rent of the building the firm occupies increases, what will happen to the firm’s…
A: In perfect competition , Profit maximizing quantity is where P = MC MC is the marginal cost which…
Q: In the following table, identify the growth theory used to model each of the following views.…
A: New growth theory laid emphasis on experimenting with new approaches of doing things; new ideas; and…
Q: Consider a consumer with the following Cobb-Douglas utility function U(x,y) = x¹/³.y2/3 Assume that…
A: Given Utility function: U(x,y)=x1/3y2/3 ......(1) The price of good y is 1 and the price of…
Q: How has the United States been effected by increasing gas prices ?
A: As the U.S. economy reopened and expanded quickly in part as a result of government stimulus…
Q: The table below presents the industry output for three different industries. Firm Industry 1…
A: The four-firm concentration ratio will main used to determine the degree to which an industry is…
Q: Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a…
A: An economic equilibrium is said to exist when all economic forces are in harmony. Economic…
Q: A man borrowed P2,000 from a bank and promised to pay the amount for one year. He received only the…
A: Interest rate is the percentage of amount that is being generated on deposit or paid as loan…
Q: Questions 1. Draw an ADAS graph at equilibrium. Suppose the stock market crashes. Which curve will…
A: Since you have given multiple subparts questions, we will solve the first three subparts for you. If…
Q: #13 The balance sheet of the central bank shows the following (all measured in millions of domestic…
A: An organisation that controls a state's monetary union's commercial banking system and regulates its…
Q: What problems are associated with contingent work and the underground (informal) economy?
A: Contingent works are those which are done on a short-term basis like freelancing. The contingent…
Q: The elimination principle discussed in this chapter tells us what we can expect in the long run from…
A: Under perfect competition there are a large number of buyers and sellers in the market. Each firm…
Q: 3. A consumption boom: Using the IS-MP diagram, explain what happens to the economy if there is a…
A: For a certain inflation rate, the IS/MP model represents the equilibrium in the money and goods…
Q: Consider a perfectly competitive market with the market demand function Qd = 1000 − 10p There are…
A: Pefectly competitive market structure is the market struture in which there are large number of…
Q: elaborate on the themes of demography
A: Introduction Demography is the combination of demons and graphy. Here demons belong to people and…
Q: a. Using one of the graphing tools described in the directions, plot the Production Possibilities…
A: An array of combinations of two theoretically producible things are shown on a graph known as a…
Q: 3. Crusty's is a pizzeria with the following cost structure: its total fixed cost is $1200 per day,…
A: Monopolistically competitive market refers to the market where close substitute products are…
Q: A company produces two competing products whose demand schedules are 91 219 1.8p₁ +0.5p2, 92 303…
A: The revenue earned by a firm equals the price per unit multiplied by the quantity sold. When a firm…
Q: 3.A person deposits $5000 into an account and the reserve requirement is 12.5%. A.Set up a…
A: Here, given information is: New deposits: $5000 Reserve requirements: 12.5% When new money is…
Q: A progressive tax is: A. designed to take a greater percentage of the income of lower-income…
A: Progressive means the one which increases with it's variable. This means progressive tax is the tax…
Q: Given the production function y = x₁ ¹/²+x₂¹/2, what is the formula for the expansion path? O
A: The expansionary path refers to the locus of cost minimizing points or it traces out the cost…
Q: In the 20th century, Latin American countries were plagued by weak governments and subject to…
A: In 20th century, U.S. Banana Company’s primary complaint was a conspiracy to restrain trade and…
Q: The U.S. government funds deficit spending by: A. selling government services. B. decreasing…
A: Budget deficit refers to a situation when government's revenues are greater than its expenses. And…
Q: Another farmer purchases nitrate and phosphate fertilizers to produce corn, and the more of any one…
A:
Q: 8) Suppose the government imposes a tax of $20 million per month on cable producers. Given that…
A: A monopoly refers to a firm that is the only seller in a market with no close competition. Since a…
Q: Suppose the information in the table is for a simple economy that produces and consumes only four…
A: The steady rise of an economy is referred to as economic growth. Looking at an economy's gross…
Q: Aggregate Demand is the prime mover of the economy." This statement was made by a: A. Classcal…
A: Aggregate demand is the sum of Consumption, Investment, government spending and net export. So, AD…
Q: nberlynn has 80 hours per week that she can devote to time spent working or on leisure activities.…
A: Income-Leisure Constraint: It is worth noting that the wage rate is the opportunity cost of leisure.…
Q: Which one of the following best describes economic growth? Select one: a. an increase in…
A: The process by which the economy's final commodities and services increase is known as economic…
Q: The cost of grading and spreading gravel on a curvy rural road is expected to be $300,000 . The road…
A: The benefit-cost ratio (BCR) is a ratio utilized in a cost-benefit analysis, to sum up, the overall…
Q: The Real GDP and population data for two hypothetical countries, Hastinapur and Kosala, for the…
A: Real GDP refers to the measure that is inflation adjusted, that reflects the quantity of goods and…
Q: The table below shows cost data for a Aurora Cannabis, which sells marijuana in a perfectly…
A: In a perfect competition , The firm will produce where the price is just greater than equal to…
Q: Classify the following Wall Street Journal articles as involving macroeconomic or microeconomic…
A: Individual components of the economy, such as consumers, businesses, producers, etc., are the focus…
Please help me with these questions with explanation
Step by step
Solved in 3 steps with 3 images
- If a countrys currency is expected to appreciate in value, what would you think will be the impact of expected exchange rates on yields (e.g., the Interest rate paid on government bonds) in that country? Hint: Think about how expected exchange rate changes and interest rates affect a currencys demand and supply.What is the difference between a floating exchange rate, a soft peg, a hard peg, and dollarization?A central bank can allow its currency to fall indefinitely, but it cannot allow its currency to rise indefinitely. Why not?
- In November, the UK central bank voted to leave its policy (bank) rate uncahged at a historic low of 0.1% which surprised investors who expceted an increase. The British Pound fell sharply against the US Dollar (more than 1%) and the Euro (more than 0.5%). The yield on 2 year gilts fell by 21 basis points.a) Why did the pound depreciate when the English Central Bank surprised the market by not hiking its policy rates as expected b) why did the yield cureve steppen after the Bank's decision not to raise rates? Are markets optimistic or pessimistic about the economy's future?Imagine that you run the central bank in a large open economy.Your goal is to stabilizeincome, and you adjust the money supply accordingly. Under your policy, what happens tothe money supply, the interest rate, the exchange rate, and the trade balance in response toeach of the following shocks?a. The president raises taxes to reduce the budget deficit.b. The president restricts the import of Japanese cars.Lecture: What Determines Fxchange Rstes? Question: Regarding exchange rate overshooting, what are the two side effects that intervene and affect the path of the exchange rate after the increase in the domestic money auppty? a. Sbick product peikes and tectining domentic interest rate: b. Deciling foreign interent ratea and sticay product prices. c. Sticky domestic interest rates and increming produat prices: d. Increasing dometic interet rates and sticky foreign inferes rates, e. Sticky faregn interat rates and dedingrg product prices:
- 2. Suppose the central bank of a country is worried about the economy overheating so it enacts a contractionary monetary policy (reducing the money supply): 2A. Assuming the country has a fixed exchange, illustrate the effects of the contractionary monetary policy with both an IS-LM-BOP graph and a foreign exchange market graph for the foreign currency, explaining which curve(s) shift and why. Explain the effects on GDP, interest rates, and the current account and capital account. 2B. What would the central bank have to do to maintain the fixed exchange rate? Illustrate this on the foreign exchange graph in 2A. (You do not need a new graph). 2C. Define sterilization and explain what the central bank would have to do to sterilize the intervention. Show on your graphs the GDP, interest rate, and exchange rate with sterilized intervention (label as point 1 on the graphs from 2A). 2D. Suppose instead the central bank does not sterilize the intervention. Explain what would happen and…Part 4 5 6 Answer all questions from this section. For each question, identify the statement as True,False, or Uncertain, and explain your reasoning A.1 Following the announcement that the amount of QE intervention by the central bankwill be reduced going forward (also known as Quantitative Tightening), according to theUIP condition, an immediate appreciation of home’s nominal exchange rate would beobserved. A.2 The difference between the slopes of the IS and RX curves depends only on the sensitivityof net exports to the real exchange rate. A.3 Consider a temporary positive inflation shock in a flexible exchange rate regime (with aninflation targeting central bank) and in a fixed exchange rate regime (where there is nopolicy intervention). Assume that both economies converge to a medium run equilibrium.Following the shock, inflation converges to its equilibrium value from above in both cases.A.4 The central bank of a common currency area should not respond to a shock specific toone…Consider an economy with the followingC = 200 + 0.4(Y − T)I = 300 − 5000rT = 0, G = 0L(rw, Y ) = 250 + 0.06Y − 300rP = 1e = 1rw = 0.09 e is the fixed exchange rate a. Derive the IS curve and compute equilibrium output and interest rate b. Derive the LM curve and compute equilibrium money supply c. Suppose the Central Bank revalues exchange rate from 1 to 0.85. Recalculate theequilibrium output, interest rate, and money supply d. Suppose the Central Bank devaluates the exchange rate from 1 to 1.3. Recalculate theequilibrium output, interest rate, and money supply.
- Suppose there is a contractionary monetary policy.Graph and explain this policy’sshort-run and long-run effects on the exchange rate,interest rate, and price level. Donot forget to specify permanent and temporary effects.c. Assume the recession in Braveland causes a decrease in the demand forMacroland dollars in the foreign exchange market. Braveland’s currency is the euro.i. Explain whether the euro will appreciate, depreciate, or remainunchanged against the dollarii. Draw a correctly labeled graph of the foreign exchange market fordollars and show the effect of the decrease in demand for dollars on theexchange rate for dollars. d. Macroland implements a combination of expansionary fiscal and monetary policies. What will be the effect of these policies on each of the following?i. Aggregate demand in Macrolandii. The price level in Macroland iii. Explain the effects of expansionary fiscal policies on interest rates inMacroland.iv. Explain the effects of expansionary monetary policies on interest rates in Macroland.suppose that the federal reserve conducts an open market sale. Everything else, including the public's expectation on inflation, held constant, this will cause the demand for U.S. assets to _______ and the U.S. dollar will _________. Decrease; appreciate increase; appreciate decrease; depreciate increase; depreciate