EBK MACROECONOMICS
10th Edition
ISBN: 9780134896571
Author: CROUSHORE
Publisher: VST
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Question
Chapter 13, Problem 3AP
a
To determine
Effect of W contractionary
b)
To determine
Effect of W contractionary monetary policy on E nominal exchange rate in short run
c)
To determine
Response to W by E if exchange rate is fixed. Impact on output, real exchange rate and net exports in short run.
d)
To determine
Alternative scenario for E.
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Check out a sample textbook solutionStudents have asked these similar questions
The Policy Trilemma states that a country or a monetary union cannot pursue the
following three policies at the same time
a) free capital mobility, a flexible exchange rate, and an independent monetary
policy.
b) capital controls, a flexible exchange rate, and an independent monetary
policy.
c) capital controls, a fixed exchange rate, and an independent monetary policy.
d) free capital mobility, a fixed exchange rate, and an independent monetary
policy.
In the Mundell-Fleming model for a small open economy with flexible exchange rates, if the economy is operating at above the natural level in the short run, then in the long run the price level will rise, the exchange rate will ______, and net exports will ______ to restore the economy to its natural rate.
a) depreciate; increase
b) appreciate; decrease
c) depreciate; decrease
d) appreciate; increase
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