Answered: What kind of monetary policy can…

What kind of monetary policy can central banks carry out in the case of surplus in capital account balance? Explain in detail and how it affects the overall balance of payments.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 7SCQ: How would a contractionary monetary policy affect the exchange rate, net exports, aggregate demand,...

See similar textbooks

Related questions

Q: Two fish farmers are deciding how many fish to raise in a public access lake. The problem is that…

A: Benefit refers to the utility that a consumer derives from the consumption of an alternative. It is…

Q: Name a firm of business that is selling a good or item that is not so unique. However, in the local…

A: Monopoly is a form of market structure in which a single firm sells a commodity for which there are…

Q: Costco sells paperback books in their retail stores and wanted to examine the relationship between…

A: We have data for X and Y where X= price and Y = demand of novel. Sample size n =6 We can estimate…

Q: Refer to Daisy's PPF Given Daisy's PPF, the following production combo, 12 pies and 12 tarts is…

A: Production possibilities frontier shows combinations of two goods that can be produced with the…

Q: Inputs of a MP Inputs of b 25 40 20 36 3. 15 32 4. 10 24 20 16 7. The table gives marginal product…

A: We have input prices pa =5 ansd pb = 8.

Q: Left Right Up 1, 3 3, 1 Down 2, 2 4, 4 a. Find the Nash equilibrium or equilibria b. Which player,…

A: Nash Equilibria gives the best possible outcome given the strategy of another player.

Q: Question 14 True or False: Economists generally support rent controls because they believe that…

A: Answer: Rents controls are used by the government with the aim to keep the price of houses…

Q: What do you think is the best sort of public policy to deal with the following pollution problems?…

A: Let us understand the solution step by step: In economics, the pollution problem refers to problems…

Q: Trade makes costs Group of answer choices higher and reduces the variety of goods and services…

A: Trade makes costs(A) higher and reduces the variety of goods and services available.(B) higher but…

Q: Q2. The associated marginal cost A monopolist has a demand curve given by P= 96 - Q and a total cost…

Q: received from the bank P1,342 and promise to repay P1,500 at the end of 9 months. Determine the…

A: The discount rate is the interest rate charged to business banks and other monetary organizations…

Q: For each of the following costs, identify the cost graph that best illustrates its cost behavior a…

A: a. Graph 3, because the rent is a fixed cost that will not change so each month a fixed amount of…

Q: Suppose the market for hats is competitive, with many small producers of hats, each of them unable…

A: Since the question you have posted consists of multiple parts, we will answer the first three parts…

Q: uppose that the US price level is $15,000/consumption bundle and that the UK price level is (Pounds)…

A: The value of a country's currency in relation to the currency of another country or economic zone is…

Q: Question 5 When the price of a good increases, Group of answer choices the demand curve for that…

A: When the price of a good increases, there is a movement along the demand curve for that good as the…

Q: This is the market for steer. Steer are processed into 1 hide and 1 beef. Initial Demand for hides:…

A: * SOLUTION :-

Q: Costco sells paperback books in their retail stores and wanted to examine the relationship between…

A: Simple regression equation: Yi = b0 +b1Xi Where b1 = slope. And sample size n = 6

Q: Refer to the figure below to answer the questions that follow. Surplus Deic GOP, Rea domestie et GOP…

A: In an economy, there are different ways to analyze the employment status based on different types of…

Q: Healthy and Hearty Soups: Healthy and Hearty Soups produces a variety of soups. There is…

A: Concept: Monopolistic competition A monopolistically competitive industry is an industry where…

Q: The pandemic caused classes and exams to be cancelled at many universities. Some experts argue that…

A: The COVID-19 situation has had a more negative impact on the demand for lower-skilled occupations.…

Q: 5) Suppose that the letter grade earned on a test for each student in a class depends upon how well…

A: To find the pure strategy nash equilibrium, it is best to underline the maximum payoff to a player…

Q: Diminishing marginal products means that if we double any one of K, N or L, output will less than…

A: In a market, a firm faces different phases of production when moving towards the production of more…

Q: 5000 Find the consumers' surplus if the demand function for a particular beverage is given by Dg)…

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

A: (a) Interest rates have an impact on both consumer expenditure (imports) and the exchange rate,…

Q: Problem #62. Use the equal marginal principle in production to explain the effects of the following…

A: Equi-marginal principle: It refers to the principle which is similar or whose base is the law of…

Q: D Question 7 A fall in real interest rates causes a shift right of the IS curve. True O False D…

A: In an economy, the interest rate olays a significant role in influencing goods market as well as…

Q: If a union wishes to maximize the number of union members employed, it will set a wage above…

A: When it comes to compensation, the phrase "competitive" refers to a salary that is comparable to or…

Q: Q)Explain how the assumptions of the aggregate supply model are different in the long run vs the…

A: The sum of all commodities and services generated by an economy during a specific time period is…

Q: Boom (50%) Recession (50%) -$ 10 Project A $ 20 $ 20 -$ 30 -$ 10 $ 30 $ 50 D. $ 50 hanager adopted…

A: Mean=Total observationNo. of observations The following formula is used to calculate the Variance…

Q: V = D + E Value of Asset = Debt + Net Worth According to normal economic theory, when will…

A: Given: V = D + E

Q: Your friend borrows P10,000 on May 1 and must repay a total of P10,700 exactly 1 year later.…

Q: Consider the total cost and total revenue given in the following table (Make sure to show all your…

A: A firm will maximise profit at a point where marginal revenue is equal to marginal cost and price is…

Q: Estimate the equilibrium price. $ per pan. Round to the nearest dollar. Use…

A: Quadratic Equation - y = ax2+bx+c And, Equilibrium is that stage where quantity demanded = quantity…

Q: Question 35 To construct a market demand curve, for each unit of quantity, find the highest price a…

A: Demand for a good, in economics, refers to the ability and willingness of a consumer to purchase the…

Q: The Reinheitsgebot is a set of laws established in the 1500s that regulate the production and sale…

A: Given:- $QD=6000-1600P $QS=-1000+2000P To graph:- Demand and supply curve. Please find detailed…

Q: 5. What does the slope of the curved line at point A shown in the figure below equal? 50 40 30 20 10…

A: Answer; the slope of the curved line at point A is 6

Q: 5. Match the earnings with the supply chain stages using the figure, which represents overall…

A: Given that Price = $2000, we have to find the share of each of the supply chain providers, given…

Q: external scale economies leads to prices that are lower than the prices in only one of the trading…

A: The answer is as follows:-

Q: Which of the following sectors of the economy has grown the fastest in the United States since the…

A: US economy is considered as one of the most advanced and developed economies in the world. As per…

Q: Fill in the remaining cells of the following table. Quantity Total Cost Marginal Cost Fixed Cost…

A: Quantity Total Cost Marginal Cost Fixed Cost Variable cost AVC ATC 0 120 --- 120 0 0 0 1 210 90…

Q: Suppose the teacher for your course, "Principles of Economics" is a libertarian and adheres strictly…

A: The policy that depicts actions that are being intended for influencing or controlling the economy's…

Q: Consider Justin who makes $1,400 per week and just won a ‘set for life’ lottery ticket which…

A: Budget Constraint shows that the value of all the goods that a consumer consumes should be less than…

Q: nsidering putting on a special one-time screening of a new movie. This screening sa fixed cost of…

A: Price Discrimination is a procedure that organizations use to boost income by charging clients…

Q: Country A has a natural climate that is perfect for growing strawberries - long sunny seasons and…

A: Absolute advantage refers to an actor's capacity to create more of a product or service than a…

Q: What would be the primary advantages of eliminating the role of the federal government in the…

A: The answer is as follows:-

Q: Consider the following production function: Q (K.L)= 5K2/3Į 1/3 What is the value of its elasticity…

Q: Q: In 2013, the demand for labour was W = %3D 600 - 3L, supply of labour was W = 100 + 10L. In 2013,…

A: According to the question, 2013 2014 Demand for Labor W = 600 - 3 L W = 700 - 3 L Supply of…

Q: The long-run AS curve is given as Y =100. a) Derive the SRAS curve. (Note: The value of EP is not…

A: * SOLUTION :- (2) From the given information the answer is given as ,

Q: In the simplest terms possible, the total impact of people on environmental resources can be…

A: The correct option is a. In the simplest terms possible, the total impact of people on environmental…

Q: Which of the following are non-rival? a) A particular blu-ray disc of a Batman movie b) The…

A: We will answer the first question since the exact one was not specified. Please submit a new…

Question

Please give answer in 1hr give reward

What kind of monetary policy
can central banks carry out in
the case of surplus in capital
account balance? Explain in
detail and how it affects the
overall balance of payments.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

How would a contractionary monetary policy affect the exchange rate, net exports, aggregate demand, and aggregate supply?
Suppose the Federal Reserve purchases $1,000,000worth of foreign assets.a. If the Federal Reserve purchases the foreign assetswith $1,000,000 in currency, show the effect of thisopen market operation, using T-accounts. Whathappens to the monetary base?
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.
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…
Suppose that government spending is increased at thesame time that an autonomous monetary policy tightening occurs. What will happen to the position of theaggregate demand curve?
Many economists are worried that a high level of budget deficits may lead to inflationary monetary policies inthe future. Could these budget deficits have an effect onthe current rate of inflation?
1. Which of the following is concerned with changing the aggregate demand of thenation?A) External balanceB) Internal balanceC) Expenditure-changing policiesD) Expenditure-switching policiesAnswer: 2. Which of the following is an example of an expansionary monetary policy?A) Increase in TaxesB) Increase in the nation's money supplyC)Increased government expendituresD) Reduction in taxesAnswer:
True-False with explanationA monetary expansion only changes inflation on the long run
From 2009 to 2011, the economies of Australia andSwitzerland suffered relatively mild effects from theglobal financial crisis. At the same time, many countriesin the euro area were hit hard by high unemploymentand burdened with unsustainably high governmentdebts. How should this have affected the euro/Swissfranc and euro/Australian dollar exchange rates?
The central bank of the Dominican Republic decides to pursue acontractionary monetary policy. Provide a table with the money supply data and inflationrate for the Dominican Republic for 2014 - 2019.(c) Based on the data from the Dominican Republic, do you agree with thecentral bank’s decision to pursue a contractionary monetary policy? Explain why orwhy not. (d) Identify a newspaper article from the Dominican Republic that provides asituation in which a contractionary monetary policy was implemented by the centralbank. Ensure that you provide a screenshot of the article in your submission. Thescreenshot should include the name of the publication, date of publication and nameof the article.(i) Identify the contractionary monetary policy used in the article. (ii) Carefully explain, in as much detail as possible, how the chosen action from thearticle will impact the money market. (iii) Illustrate using the money market diagram, the overall impact of the chosen actionfrom the article on…
Much of the U.S. government debt is held by foreigninvestors as treasury bonds and bills. How do fluctuations in the dollar exchange rate affect the value of thatdebt held by foreigners?
Why is it that in a pure, flexible exchange rate system,the foreign exchange market has no direct effect onthe money supply? Does this mean that the foreignexchange market has no effect on monetary policy?