This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Expansionary monetary policy will have what effect on the components of aggregate demand? A) ... (Read 56 times)

V@ndy87

  • Hero Member
  • *****
  • Posts: 571
on: Jun 29, 2018
Expansionary monetary policy will have what effect on the components of aggregate demand?
 
  A) Consumption, investment, and net exports will rise.
  B) Consumption will rise, but investment and net exports will fall.
  C) Consumption and investment will rise, but net exports will fall.
  D) Consumption will fall, but investment and net exports will rise.

Question 2

How does an increase in government purchases financed by an increase in the deficit affect exchange rates? Support your answer with graphs of the loanable funds market and the foreign exchange market.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

14vl19

  • Sr. Member
  • ****
  • Posts: 310
Reply #1 on: Jun 29, 2018
Answer to Question 1

A

Answer to Question 2

An increase in government purchases financed by an increase in the deficit will reduce the supply of loanable funds, thereby increasing the interest rate. The increase in the interest rate will increase the demand for dollars (as capital inflows increase) and reduce the supply of dollars (as capital outflows decrease). Both the increase in the demand for dollars and the decrease in the supply of dollars will increase the equilibrium exchange rate, as shown below.


V@ndy87

  • Member
  • Posts: 571
Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

Dominic

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Acute bronchitis is an inflammation of the breathing tubes (bronchi), which causes increased mucus production and other changes. It is usually caused by bacteria or viruses, can be serious in people who have pulmonary or cardiac diseases, and can lead to pneumonia.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

The U.S. Preventive Services Task Force recommends that all women age 65 years of age or older should be screened with bone densitometry.

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

The National Institutes of Health have supported research into acupuncture. This has shown that acupuncture significantly reduced pain associated with osteoarthritis of the knee, when used as a complement to conventional therapies.

Components of E.coli Components of E.coli
Components of critical thinking in nursing Components of critical thinking in nursing
A person with a defective "P" gene might only have it effect the Hair A person with a defective "P" gene might only have it effect the Hair
Alzheimer’s Drugs Work by Intensifying the Effect of Acetylcholine at the Receptor Alzheimer’s Drugs Work by Intensifying the Effect of Acetylcholine at the Receptor
Hall-effect switches use metallic shutters to shunt magnetic lines of force away from a silicon ... Hall-effect switches use metallic shutters to shunt magnetic lines of force away from a silicon ...
Arrangement of components of the two photosystems on the thylakoid membrane Arrangement of components of the two photosystems on the thylakoid membrane
Video: Non-polar compounds - insolubility

For a complete list of videos, visit our video library