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Biblioteka

Resequence Fiscal and Monetary Policy-FOREX

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Posljednje ažuriranje over 1 year ago
4 questions
1
Pitanje 1
1.

Government enacts expansionary fiscal policy......

Gov-->Loanable Funds Market-->AD-->Phillips........

  1. UE increases

  2. G inc and T dec

  3. PL decreases and Real Output decreases

  4. AD decreases

  5. real interest rate increases

  6. Dlf increases since the government needs loans OR Slf decreases since the banks are lending to the government

  7. Interest sensitive spending (C+I) decreases

  8. G is therefore borrowing more

1
1
1
Pitanje 2
2.

Central Bank Expansionary Monetary Policy

Central Bank-->MM-->Loanable Funds Market-->AD-->Phillips.....

  1. Interest sensitive spending (C+I) increases

  2. Nominal interest rates decrease and Qm increases

  3. Real interest rates decrease and Qlf increase

  4. AD increases

  5. UE decreases

  6. Slf increases

  7. PL increases and Real Output increases

  8. Ms increases

  9. Central Bank Buys Bonds

Pitanje 3
3.

Central Bank Contractionary Monetary Policy

Central Bank-->MM->Loanable Funds Market-->Investment-->Forex-->AD-->Phillips.....

  1. AD decreases

  2. Foreign G/S are relatively less expensive AND Domestic G/S are relatively more Expensive

  3. UE increases

  4. $ appreciates

  5. US EX decreases and IM increase

  6. Central Bank Sells Bonds

  7. Ms decreases

  8. NX decreases causing a current account deficit

  9. Nominal interest rates increase and Qm decreases

  10. Real interest rates increase and Qlf decrease

  11. Slf decreases

  12. S$ decreases OR D$ increases

  13. PL decreases and RGDP decreases

Pitanje 4
4.

Foreign Economy has an Inflationary Gap

Foreign Economy-->Forex-->Trade-->AD-->Phillips.....

  1. $ can buy more foreign currency and foreign currency can buy less $

  2. US G/S Relatively Less expensive and foreign G/S are relatively more expensive

  3. US EX decreases and IM increases

  4. Foreign Economy has high PL and high DI

  5. S$ decreases and D$ increases

  6. US Nx decreases causing a Current Account deficit

  7. US AD decreases

  8. UE increases

  9. $ appreciates

  10. PL decreases and RGDP decreases