Which of these graphs shows how a contractionary monetary policy at Home affects its exchange rate? CHF) Faur ERRO LOV) A ERRIF) HP ERR C(H/F) FINI EAR) LONY) B ERRF) ERR MP
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- What is the difference between a floating exchange rate, a soft peg, a hard peg, and dollarization?How would a contractionary monetary policy affect the exchange rate, net exports, aggregate demand, and aggregate supply?Suppose there is a contractionary monetary policy.Graph and explain this policy’sshort-run and long-run effects on the exchange rate,interest rate, and price level. Donot forget to specify permanent and temporary effects.
- What is the difference between transaction demand, speculative demand, and autonomous transactions by central banks? Which of these factors determines the longterm quarterly trends in exchange rates?Consider a country that adopts the fixed exchange rate system and uses monetary policy to sustain the fixed exchange rate. To counter a speculative attack on its currency, the central bank must tighten monetary policy.Answer true, false, or uncertain. Please briefly explain your answrTo fight the economic slowdown from the Covid-19 pandemic, the Bank of Canada decides to expand the money supply. a) Using diagrams, carefully explain whether or not this policy would be effective under a fixed value for the exchange rate? b) What is the effect of this policy on the interest rate in the long run? Explain your answer.
- Use the information in the table below to calculate the change in the long-run Arakko ignis / Krakoan xcoin exchange rate (Ei/x). Specifically, does the Arakko ignis appreciate or depreciate, and by what percentage? Country - Change in Money Supply (µ) - Growth rate (g) Arakko 30% –4% Krakoa 10% 6%Kindly note I need all answers It will gives you upvote QUESTION 13 For the following questions assume that the Fed is committed to price level stability. Initially, the exchange rate is 1.0. The US interest rate starts at 0.15 and the Fed increases the money supply by twenty percent (0.2) reducing the interest rate to 0.01. Assume that the economy completely adjusts after two years. Two years from now, the exchange rate is. 1.2 0.80 1.0 1.10 QUESTION 14 What is the change in the price level over the next two years 0.20 0.10 0.0 -0.10 QUESTION 15 Starting from today, what is the change in the interest rate over the next two years -0.10 0.00…Consider a small open Keynesian economy where the domestic price is fixed initially: a) In a fixed exchange rate system, explain how the economy would react to a monetary contraction in the short run and long run. Demonstrate using a graph b) a) In a flexible exchange rate system, explain how the economy would react to a monetary contraction in the short run and long run. Demonstrate using a graph
- Why do interest rates and exchange rates move in the same direction in theshort run?Suppose the Central bank declares an increase in Statutory Liquidity Ratio as well as CRR. What will be the impact of this policy on net exports of the country under a flexible exchange rate regime?In July 2018 Yi Gang, Governor of the People’s Bank ofChina, said the fluctuations in the foreign exchange market were mainly due to factors like stronger U.S. dollar andexternal uncertainties. How can fluctuations in currencyexchange rate affect your country’s economy?
