Suppose that US citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Q: Other things the same, as the price level falls, a country’s exchange rate   and interest rates…

A: Price level of certain goods and services demanded in the economy effects the various parameters…

Q: What is meant by deficit in balance of payments?

A: The balance of payments takes into account the inflow and outflow of the money for a country.  It is…

Q: How does the government intervene in the fixed exchange rate to keep it stable? Explain your answer…

A: Fixed exchange rate A fixed exchange rate is a type of exchange rate system in which a monetary…

Q: How are both the real interest rate, r, and the real exchange rate, Q, actually determined?

A: The inflation rate is the difference between the actual and nominal interest rates. (The nominal…

Q: Y = C + I + G + NX Y=$6000 G=$1000 T=$1150 C=$200+0.75(Y−T) I=1100−50r NX=913−913ε…

A: Private saving = Y -T -C = Y -T -[200+0.75(Y−T)] = 6000-1150-[200+0.75(6000−1150)] =4850 -3837.5…

Q: Changes in which of the following will cause a change in exchange​ rates?   A. consumer preferences…

A: Exchange rates is defined as the rate at which one currency is traded for another. So, there can be…

Q: Does the level of the exchange rate matter in the long run? Why or why not?

A: When a country values its currency with another country’s currency then this situation is called…

Q: Define the trade balance for an open economy and explain the relationship between the trade balance…

A: The real exchange rate (RER) among currencies is the product of the nominal change rate (the dollar…

Q: Using examples, demonstrate how exchange rate forecasting is approached?

A: The exchange rate of a country is the price of one currency in terms of another. It is used when the…

Q: Explain the impact of no restriction on foreign goods on the real exchange rate.

A: The exchange rate is a metric that defines how many units of domestic currency are required to…

Q: 8. An increase in national saving requires either a rise in investment or an increase in the capital…

A: From the national income identity, an open economy can be expressed as follows,  Y = C + I + G + NX…

Q: Similarities of the effects of the Spanish Flu and the Ukraine-Russia War on the economies of…

A: Similarities The Spanish flue expanded in 3 phases: the first one in the springtime of 1918, the…

Q: Explain how changes in interest rates are likely to affect exchange rates. ​

A: The exchange rate reflects the price of one country's currency in terms of foreign country's…

Q: How do the nominal exchange rate and the real exchange rate differ? How do we find the real exchange…

A: The exchange rate is a rate at which one currency is exchanged for another. It helps to find the…

Q: In the open-economy macroeconomic model, if investment demand increases, then the real interest rate…

A: In an open economy macroeconomic model, trade between countries takes place. The real interest rate…

Q: How does devaluation (lowering the exchange rate) help cure current account deficit in the economy?

A: Devaluation refers to the situation where domestic country reduces the value of its currency against…

Q: 23. Suppose the U.S. is operating in an open economy. Suddenly, there is a large decrease in…

A: In an economy, consumer expenditure refers to the total amount of money spent by individuals and…

Q: For a small open economy with production and investment, what are the immediate effects on output…

A: A small open economy (SOE) is an economy of a country that engages in international trade but is…

Q: Define overvalued exchange rates. Discuss four ways in which governments policymaker can respond to…

A: An exchange rate between two currencies is the rate at which one currency is traded for another. The…

Q: What is capital flight? When a country experiences capital flight, what is the effect on its…

A: Capital flight refers to the situation where assets or money rapidly flows out of the country…

Q: When you write an exchange rate in terms of how many units of a foreign currency it takes to buy one…

A: A direct quote depicts the amount of foreign currency that can be bought for a certain unit of the…

Q: INSTRUCTIONS: For each of the following, explain the effect on a) current account OR capital account…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: how might changes to the exchange rate flow through to the domestic economy? what is Y-A = X-M?

A: The Elasticity approach is related to price effect of devaluation. This approach analyses the…

Q: What is an appreciation in the exchange rate of a currency? Outline two (2) positive effects of an…

A: The exchange rate refers to the value of one country’s currency in terms of another country’s…

Q: How can a country fix its exchange rate to another? Is it sustainable for them to maintain it fixed?

A: The regime where the government fixes its exchange rate(e) with other country is called ‘Fixed…

Q: parity

A: Exchange rate is the price of one currency which is being measured in terms of another currency.…

Q: What is interest rate parity? Is it a reasonable assumption that interest rate parity holds between…

A: The theory of interest rate parity (IRP) can be explained as a fundamental analysis that helps in…

Q: What is interest rate parity? Is it a reasonable assumption that interest rate parity holds between…

A: What is interest rate parity? Is it a reasonable assumption that interest rate parity holds between…

Q: True/False and Explain The exchange rate between two countries can be thought of as unrelated to any…

A: A rate at which one currency of a country can be exchanged for another is called an exchange rate.…

Q: Explain the determinants of a nation's foreign exchange rate.

A: A nation's foreign exchange rate is between two currencies. Basically, "trade rates are how much one…

Q: For small, open economies that export and import a large volume of goods and services, a fixed…

A: In the international market, exchange rate are determine under fixed or flexible exchange rate…

Q: How does each of the following changes affect the real gross domestic product and price level of an…

A: Because of depreciation of currency,exports increases,due to which domestic production increases and…

Q: In a country if households decide to save .........., then the real exchange rate ............ and…

A: Exchange rate refers to the amount of domestic currency that required to purchase one unit of…

Q: suppose there is a wave of popularity for American fruit in your country. How will this affect the…

A: The balance of trade impacts cash exchange rates through its impact on the market interest in…

Q: Imagine that the economy of Germany finds itself in the following situation: the government budget…

A: The national investment and national saving identity explains the relationship between the total…