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Biblioteka

Resequence Fiscal and Monetary Policy-FOREX

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

Government enacts expansionary fiscal policy......

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

  1. G inc and T dec

  2. UE increases

  3. G is therefore borrowing more

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

  5. PL decreases and Real Output decreases

  6. Interest sensitive spending (C+I) decreases

  7. real interest rate increases

  8. AD decreases

1
1
1
Pitanje 2
2.

Central Bank Expansionary Monetary Policy

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

  1. Real interest rates decrease and Qlf increase

  2. Ms increases

  3. Nominal interest rates decrease and Qm increases

  4. UE decreases

  5. Slf increases

  6. Interest sensitive spending (C+I) increases

  7. PL increases and Real Output increases

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

  2. UE increases

  3. S$ decreases OR D$ increases

  4. Real interest rates increase and Qlf decrease

  5. US EX decreases and IM increase

  6. PL decreases and RGDP decreases

  7. AD decreases

  8. Slf decreases

  9. Ms decreases

  10. Central Bank Sells Bonds

  11. $ appreciates

  12. Nominal interest rates increase and Qm decreases

  13. NX decreases causing a current account deficit

Pitanje 4
4.

Foreign Economy has an Inflationary Gap

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

  1. US AD decreases

  2. Foreign Economy has high PL and high DI

  3. US EX decreases and IM increases

  4. UE increases

  5. S$ decreases and D$ increases

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

  7. $ appreciates

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

  9. PL decreases and RGDP decreases

  10. US Nx decreases causing a Current Account deficit