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 ________. Question 20 options: increase; appreciate decrease; depreciate decrease; appreciate increase; depreciate
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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
Question 20 options:
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increase; appreciate |
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decrease; |
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decrease; appreciate |
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increase; depreciate |
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- COURSE: MACROECONOMIC - MUNDELL-FLEMING MODEL Until mid-2005, the Central Bank of China established a fixed exchange rate between its currency (yuan) and the dollar. The fixed exchange rate regime was reintroduced during the Great Recession between July 2008 and June 2010.After that date, the Chinese central bank established fluctuation bands for the yuan allowing it to move within these bands. However, the US has accused China on several occasions of taking actions to devalue its currency against the dollar.EXPLAIN and GRAPH with an open economy model with a fixed exchange rate (MUNDELL-FLEMING MODEL) the different chain effects that are generated when a country devalues its currency. From your results DETERMINE why it would be convenient for China to devalue its currency with respect to the dollar and in what way USA is harmed. Hint: according with statement on first paragrah, explain what's happens if devaluation process is defined and by Mundell-Fleming Model explain differents…(a) There are two countries in the world, Australia and Japan. Suppose that the central bank of Australia lowers the real interest rate, while the central bank of Japan raises the real interest rate. In this case, the nominal exchange rate (Yen/Dollar) increases. Answer true or false. Please briefly explain your answer. (b) Argentina is an open economy. Suppose that Argentina fixes the value of their currency to US dollars. If Argentina experiences hyperinflation, it can stabilize inflation by using its monetary policy freely. Answer true or false. Please briefly explain your answer.If the domestic currency depreciates, b) using a graph of aggregate demand and supply EXPLAIN how lags in this policy process can result in undesirable fluctuations in output and inflation.
- Assume that the Japanese government wants to reduce inflation. Which of the following would be an appropriate action for the Japanese government? A. Sell yen for foreign currency B. Decrease interest rates C. None of the options are correct D. Buy yen with foreign currency E. Increase interest ratesCan you think of any major disadvantages to dollarization? How would a central bank work in a country that has dollarized?QUESTION THREE The Zambian economy has been facing escalating inflationary amid weakening of the Zambian Kwacha. In an attempt to arrest the situation, Dr. Kalyalya and his Monetary Policy Committee have been tightening monetary policy through rising the policy rate and statutory reserve. Assuming the Zambian can be modelled using the IS-LM-BOP Model, discuss and show the effects of these actions on the Zambian Economy under the current Exchange Rate Regime and External Sector policies. NOTE: Be sure to show all relevant graphs, shifts of curves, changes to important variables. EXPLAIN. Provide both graphs and full explanation.
- How current inflation trends (2017) in Australia, United States and Great Britain impact on currencies such as Australian dollar ,US Dollar and Great Britain Pound. For example, Are inflation rates expected to rise under the Trump presidency and what will happen to the US currency? Brexit impact on inflation and UK economy and what will happen to the Pound?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)Suppose the price level and value of the U.S. Dollar in year 1 are 1 and $1, respectively. Instructions: Round your answers to 2 decimal places. a. If the price level rises to 1.25 in year 2, what is the new value of the dollar? b. If, instead, the price level falls to 0.50, what is the value of the dollar?
- Suppose the price level and value of the U. S. dollar in year 1 are 1 and $ 1, respectively. (Round your answers to 2 decimal places) 1) if the price level rises to 1.25 in year 2, what is the new value of the dollar? 2). If, instead, the price level falls to 0.50, what is the value of the dollar?Question 2 If a country wants to keep its exchange rate unchanged, then the Central Bank must sacrifice full oversight of monetary policy. Is the statement true or false. Explain your answer. (b) With the existing economic development, it is found that monetary policy is not always in accordance with the theory. Therefore Robert Lucas and Thomas Sargent then developed an analysis to evaluate monetary policy theory, and then Lucas and Sargent explained rational expectations. Explain what is meant by rational expectation and how it impacts the effectiveness of monetary policy. ..Suppose that in a small open economy exchange rates are fixed. The AD and AS curves are given by:AD:Y =110+2G−T−10π AS:Y =105+10(π−π ̄)where Y is output, G is government spending, T is taxes, π is inflation and π ̄ is core inflation. Why does aggregate demand not depend on monetary policy? What is the natural rate of output? Suppose we are at the long run equilibrium. Suppose also that the government is running a balanced budget and world inflation is equal to 1. What are the values of G, T, Y, π and π ̄? If the government sets both G and T to 10, what will happen to Y and π in the short run?
