ECONOMICS-W/MYECONLAB
ECONOMICS-W/MYECONLAB
7th Edition
ISBN: 9780134833125
Author: Hubbard
Publisher: PEARSON
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Chapter 30, Problem 30.2.16PA

Subpart (a):

To determine

Shortage or surplus of baht in the foreign exchange market and amount of baht required to buy or sell to maintain the pegged exchange rate.

Subpart (b):

To determine

Shortage or surplus of baht in the foreign exchange market and amount of baht required to buy or sell to maintain the pegged exchange rate.

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A country utilizes a fixed exchange rate. If the central bank were to increase the money supply, what impacts would it have on the economy? Use a diagram to explain your answer.
Q2-17 Refer to the following diagram to help you answer this question.Under fixed exchange rates, the automatic adjustment mechanism will lead to Select one: a. a fall in the money supply, a fall in income, and a fall in the interest rate. b. a rise in the money supply, a fall in income, and a fall in the interest rate. c. a fall in the money supply, a rise in income, and a rise in the interest rate. d. a fall in the money supply, a fall in income, and a rise in the interest rate.
where a country which currently uses a fixed exchange rate regime; If the central bank were to increase the money supply, what impacts would it have on the economy? Use a diagram to explain your answer.
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