Which of the following characteristics describe the US economy a) fixed exchange rates, open capital markets,...
Which of the following characteristics describe the US economy
a) fixed exchange rates, open capital markets, flexible interest rates
b) flexible exchange rate, open capital markets, control of monetary policy
c) fixed exchange rate, closed capital markets, no control of monetary policy
d) flexible exchange rate, open capital markets, no control over monetary policy
Homework Answers
b) flexible exchange rate, open capital markets, control of monetary policy
The US currency changes according to the foreign exchange index, it means US has flexible exchange rate. Federal Reserve, the central bank of US controls the money supply in US using interest rates. So, US has control of monetary policy. US also has open capital market where foreign countries can also invest freely.
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Which of the following characteristics describe the US
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a) fixed exchange rates, open capital markets,...
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IV. Flexible exchange rates and foreign macroeconomic events Consider an open economy with flexible exchange rates. Let UIP stand for the uncovered interest parity condition. a. In an IS-LM-UIP diagram, show the effect of an increase in foreign output, Y", on domestic output, Y. Explain in words. b. In an IS-LM-UIP diagram, show the effect of an increase in the foreign interest rate,i on domestic output, Y. Explain in words. Given the discussion of the effects of fiscal policy in...
Question 100In an open economy with flexible exchange rates, monetary policy affects Not yet answered through changes in the real interest rate and affectsthrough changes in the Points out of 1.0...
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options for first question: more effective, the same, less
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III. Monetary policy under flexible exchange rates a. How does a monetary expansion in an economy...
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Which is preferable: a fixed or a flexible exchange rate? Why? a) Fixed because it provides...
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IV. Flexible exchange rates and foreign macroeconomic events Consider an open economy with flexible exchange rates. Let UIP stand for the uncovered interest parity condition. a. In an IS-LM-UIP diagram, show the effect of an increase in foreign output, Y", on domestic output, Y. Explain in words. b. In an IS-LM-UIP diagram, show the effect of an increase in the foreign interest rate,i on domestic output, Y. Explain in words. Given the discussion of the effects of fiscal policy in...
Question 100In an open economy with flexible exchange rates, monetary policy affects Not yet answered through changes in the real interest rate and affectsthrough changes in the Points out of 1.00 exchange rate. r Remove flag Select one: A. Consumption and investment; net exports O B. net exports; taxes and saving o c. productivity and growth; consumption O D. taxes and saving; net exports
Question 100In an open economy with flexible exchange rates, monetary policy affects Not yet answered through...
Which of the following statements about a country with a fixed exchange rate and perfect capital mobility is not correct? (a) Shocks to aggregate demand lead to large changes in output. (b) Domestic interest rates must match interest rates in other countries. (c) Inflation targeting works well. (d) Monetary policy cannot be used to stabilize the economy. What of the following statements about the first thing that firms do in response to a fall in demand is correct? (a) Reduce...
options for first question: more effective, the same, less
effective
As compared to a closed economy, in an open economy with flexible exchange rates, monetary policy is Expansionary monetary policy is more effective in an open economy with flexible exchange rates because lower interest rates cause the dollar to O A. appreciate, which decreases exports and increases imports. O B. depreciate, which increases exports and decreases imports. O C. appreciate, which increases exports and decreases imports. OD. depreciate, which decreases...
II. Consider an open economy with flexible exchange rates. Suppose output is at the natural level, but there is a trade deficit. The goal of policy is to reduce the trade deficit and leave the level of output at its natural level. What is the appropriate fiscal and monetary policy mix?
III. Monetary policy under flexible exchange rates a. How does a monetary expansion in an economy with flexible exchange rates affect consumption and investment? b. How does a monetary expansion in an economy with flexible exchange rates affect net exports?
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