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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. AD decreases

  2. Interest sensitive spending (C+I) decreases

  3. UE increases

  4. real interest rate increases

  5. PL decreases and Real Output decreases

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

  7. G inc and T dec

  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. Real interest rates decrease and Qlf increase

  2. PL increases and Real Output increases

  3. Interest sensitive spending (C+I) increases

  4. UE decreases

  5. Ms increases

  6. AD increases

  7. Nominal interest rates decrease and Qm increases

  8. Central Bank Buys Bonds

  9. Slf increases

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. Ms decreases

  3. Central Bank Sells Bonds

  4. $ appreciates

  5. US EX decreases and IM increase

  6. Slf decreases

  7. AD decreases

  8. Real interest rates increase and Qlf decrease

  9. Nominal interest rates increase and Qm decreases

  10. UE increases

  11. NX decreases causing a current account deficit

  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 EX decreases and IM increases

  3. UE increases

  4. US AD decreases

  5. Foreign Economy has high PL and high DI

  6. $ appreciates

  7. S$ decreases and D$ increases

  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