If the domestic currency depreciate, b) Use a graph of aggregate demand and supply to demonstrate how lags in the policy process can result in undesirable fluctuations in output and inflation
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If the domestic currency
b) Use a graph of aggregate
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- If the domestic currency depreciates,using a graph of aggregate demand and supply EXPLAIN how lags in this policy process can result in undesirable fluctuations in output and inflation.When the United States dollar depreciates, which of the following parties will suffer? Group of answer choices Australian firms selling in the U.S. countries importing from the U.S. Australian firms selling in Japan U.S firms selling in EuropeThe U.S. economy is faltering, so the value of its associated currency, the dollar, is likely to
- The British pound (GBP) falls in value relative to the dollar. Consider a U.S. bank with a European trading subsidiary in London (which earns profit in pounds). This devaluation...benefits/harm the U.S. bank, since each pound it earns in profits through its European subsidiary is now worth ....more/less dollars.If M stands for money supply, R for interest rate, E number of units of domestic currency per unit of foreign currency, Ee expected future value of E, a permanent increase in the money supply leads to the following sequence in the short run: A) M up, R up, Ee down, E up (domestic currency depreciates). B) M up, R up, Ee down, E down (domestic currency appreciates). C) M up, R up, Ee up, E up (domestic currency depreciates D) M up, R down, Ee up, E up (domestic currency depreciates) E) M up, R down, E up (domestic currency depreciates)When investors worldwide become more willing to substitute their domestic assets for US assets (flight to safety), the US net capital outflow function and the IS curve become flatter. Under those assumptions, one can predict that monetary policy becomes relatively ____________ effective than fiscal policy to change economic output and employment in the short run. One can also predict that a monetary contraction would cause the US dollar to ____________. a. less; depreciate b. more; appreciate c. more; depreciate d. less; appreciate
- A restrictive monetary policy in Canada is most likely to: Multiple Choice depreciate the international value of the dollar and decrease Canadian net exports. depreciate the international value of the dollar and increase Canadian net exports. appreciate the international value of the dollar and increase Canadian net exports. appreciate the international value of the dollar and decrease Canadian net exports.The U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…The U.S. dollar is still considered the most traded and the most stable currency in the world. It is easily converted over to other currencies when trading and is also the official currency of several U.S. territories. However, a strong U.S. dollar has both advantages and disadvantages. One of the advantages that was already mentioned is that the conversion of the U.S. dollar over to other countries is fairly easy and grants it a greater degree of buying power for foreign products. This also makes foreign imports cheaper not to mention investors benefit when engaging in FDI. The disadvantages of a strong U.S. dollar is that it makes it more expensive for foreign countries to import products from the U.S., which negatively affects industries and business owners within that country as a result. It can even negatively affect the U.S. because those that conduct business internationally will technically earn less from foreign sales if their currency is not fully convertible. Overall, even…
- Which of the following is likely to occur for the United States, if the US dollar loses strength relative to the Japanese yen, ceteris paribus? A- Aggregate demand will decrease (shift left) B- Aggregate demand will increase (shift right) C- Aggregate supply will increase (shift right) D- Aggregate supply will decrease (shift left)Distinguish between a nominal appreciation and a real appreciation of a currency.Suppose the dollar depreciates relative to foreign currencies. If U.S. firms have domestic content below 100%, the benefit to domestic firms is _____ (greater or less) than the benefit if U.S. producers had domestic content of 100%.
