Homework Help Question & Answers

a. Suppose that the rest of the world goes through an economic recession. Show graphically and explain what happens to e...

a. Suppose that the rest of the world goes through an economic recession. Show graphically and explain what happens to exchange rates and net exports.

b. If we assume that there are two economies that are trading parties. When one of them goes through an economic recession show graphically how this business cycle is transmitted to the other country.

c. Following the Great Recession the U.S. Federal Reserve decreased interest rate targets drastically. Show graphically and explain what happens to exchange rates and net exports as a result of this policy.

d. Show graphically what impact the U.S.’s Federal Reserve policies had on the economies of their trading partners.

0 0
Next > < Previous
ReportAnswer #1

A. if the rest of the world goes through an economic recession compared to the country in question, then interest rates in those countries will fall. This would make the ROW less attractive to save money. So money flows are less likely to leave ROW and move to the country in question that has higher interest rate. People from ROW will sell their currencies to buy currency of this country which has higher interest rate. So, currency of this country will appreciate and currency will depreciate in ROW. Increase in exchange rate in the country in question will make residents of this country to buy more goods from the ROW because those goods are cheaper now. But people from ROW will demand less goods from this country because the goods in this country are costly now as currency in this country has appreciates. So, in this country import increases and export falls, so net export (export - import) will decrease.

Higher imtenest ates im the coumta uestion, im Us A will caurse Say dlemand inuestons to SO that they cam furchase imtenest b

Know the answer?
Add Answer of:
a. Suppose that the rest of the world goes through an economic recession. Show graphically and explain what happens to e...
Your Answer: Your Name: What's your source?
Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • R' Question #2 a. Suppose that a candidate running for president of the United states proposed a ...

    r' Question #2 a. Suppose that a candidate running for president of the United states proposed a 20 percent tarifen tax) on imports to the United States from major trading partners like Chine, Japan, Canada, Mexico graphically the impact of this balance or net exports. Assume that the country starts from a position of balanced trade, i.e. exports equal imports. Be sure to label: i. the axes; ii. the curves; ii the initial equilibrium values; iv, the direction the curves...

  • Question 1 (20 marks) The recent global outbreak of Covid-19 has major economic consequences. Using the...

    Question 1 (20 marks) The recent global outbreak of Covid-19 has major economic consequences. Using the AS-AD model, show what will be short-term impact of this crisis on the AIRLINE INDUSTRY Discuss some reasons why this impact may happen. b. Bank of Canada has already taken Fiscal and Monetary policy measures to stabilize the economy during the time of this outbreak. What actions has it take in terms of Fiscal Policy? In terms of Monetary Policy? (Provide specific details, Use...

  • Answer questions 10 through 13 with reference to Figure 1. w bis 0225 l 3 .sogo...

    Answer questions 10 through 13 with reference to Figure 1. w bis 0225 l 3 .sogo Figure 1 gabond to non ll "10 non hann o LIRANJ Real Interest Rates (%) Enter • "A" if arrow A represents the • "B" if arrow B represents the Aggregate Output ($) • "N" if the impact of the development mentioned is not represented in the diagram. 10. Adoption of a large debt-financed government infrastructure investment program. 11. Onset of a serious recession...

  • Questions: c) An emergency tariff on a wide range of imports would be effective in addressing...

    Questions: c) An emergency tariff on a wide range of imports would be effective in addressing U.S deficits and forcing other nations to purchase more U.S. exports; d) One reason the U.S. does not export more is lagging investment in domestic industries. Why Protectionism Cannot Cure the Trade Deficit The causal link between investment flows, exchange rates, and the balance of trade explains why protectionism cannot cure a trade deficit. In his 1997 book, One World, Ready or Not, Washington...

  • 1 .Which concept represents the broadest view? Trade Surplus Globalization International Business 2 If you are...

    1 .Which concept represents the broadest view? Trade Surplus Globalization International Business 2 If you are able to produce 1 piece of fine furniture or 10 birdhouses using the same resources, and your competitor is able to produce 5 pieces of fine furniture or 10 birdhouses using the same resources, who has the comparative advantage? You Neither Your competitor in fine furniture 3 When conducting business in a market of comparative advantage, trading partners will realize: decreased demand for products....

  • Match the following: Adam Smith David Ricardo John Maynard Keynes Choices: (2 are not used.) a....

    Match the following: Adam Smith David Ricardo John Maynard Keynes Choices: (2 are not used.) a. founder of modern market economics comparative advantage-argument for mutual benefits of international trade comparative advantage-emphasized job displacements of international trade founder of modern macroeconomics invented capitalism duo If a firm has trouble selling its good, it can lower price. increase demand. decrease supply. both a) and b) are correct. 6. People often pay too much for goods because they are not aware of which...

  • Read the article on China’s Forex Reserve . In your opinion and from the article, why had China’s foreign reserve kept d...

    Read the article on China’s Forex Reserve . In your opinion and from the article, why had China’s foreign reserve kept dropping? What would be the Chinese government’s motivation in lowering its foreign reserve at the time the article was published? China Foreign-Exchange Reserves Keep Dropping; Reserves fall to lowest levels in nearly six years, testing central bank's resolve to stabilize the yuan Wei, Lingling . Wall Street Journal (Online); New York, N.Y. [New York, N.Y] 08 Jan 2017: n/a....

  • Chapter overview 1. Reasons for international trade Resources reasons Economic reasons Other reasons 2. Difference between...

    Chapter overview 1. Reasons for international trade Resources reasons Economic reasons Other reasons 2. Difference between international trade and domestic trade More complex context More difficult and risky Higher management skills required 3. Basic concept s relating to international trade Visible trade & invisible trade Favorable trade & unfavorable trade General trade system & special trade system Volume of international trade & quantum of international trade Commodity composition of international trade Geographical composition of international trade Degree / ratio of...

  • can someone please help me with an introduction paragraph and a summary of the whole article....

    can someone please help me with an introduction paragraph and a summary of the whole article. us. Trump Didn't Kill the Global Trade System. He Split It in Two. Allies find relations modestly tweaked despite the president's rhetoric, while relations with China are entering a deep freeze By Greg Ip Dec. 26, 2018 1136 am. ET When Donald Trump entered the White House on a platform of defiant nationalism nearly two years ago, many feared he would dismantle the global...

  • Volkswagen's Hedging Strategy 1. Why did Volkswagen suffer a 95% drop in its 4th quarter, 2003 pr...

    Volkswagen's Hedging Strategy 1. Why did Volkswagen suffer a 95% drop in its 4th quarter, 2003 profits? 2. Do you think the Volkswagen’s decision to hedge only 30% of its anticipated U.S. sales was a good? Why or why not? 3. Do you think the Volkswagen’s decision to revert back to hedging 70% of its foreign currency exposure was a good decision? Why or why not? Embraer and the Wild Ride of the Brazilian Real 4. Is a decline in...

Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
Share Your Knowledge

Post an Article
Post an Answer
Post a Question with Answer

Self-promotion: Authors have the chance of a link back to their own personal blogs or social media profile pages.