Country X, an open economy, has an increase in the demand for money which led to a significant increase in the real interest rates relative to the rest of the world. a. Explain how this increase in interest rates will affect each of the following for the Country X. i. Investment ii. The international value of its currency iii. Exports
2. Country X, an open economy, has an increase in the
a. Explain how this increase in interest rates will affect each of the following for the Country X.
i. Investment
ii. The international value of its currency iii. Exports
b. Using a correctly labelled aggregate demand and
i. Output
ii. The price level
(c). Identify one fiscal policy action that could counter the effect identified in part (b). Explain how this policy will affect each of the following.
i. Output
ii. The price level
iii. Nominal interest rates
(d). i. Identify one
ii. Using a correctly labelled
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