This topic contains a solution. Click here to go to the answer

Author Question: What effect does a depreciation of the dollar have on real GDP in the United States in the short ... (Read 32 times)

Lisaclaire

  • Hero Member
  • *****
  • Posts: 569
What effect does a depreciation of the dollar have on real GDP in the United States in the short run?
 
  A) Real GDP will be unaffected by the depreciation of the dollar.
  B) Real GDP will rise.
  C) Real GDP will be unchanged, but nominal GDP will rise.
  D) Real GDP will fall.

Question 2

In the Taylor rule, does the target for the federal funds rate respond differently for a recession caused by a decrease in aggregate demand and for a recession caused by a decrease in short-run aggregate supply? Explain whether there is or is not a
 
  difference in how the target for the federal funds rate changes.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

DHRUVSHAH

  • Sr. Member
  • ****
  • Posts: 317
Answer to Question 1

B

Answer to Question 2

The target for the federal funds rate responds differently. The output gap is negative with both recessions, but the current inflation rate and the inflation gap differ. The decrease in short-run aggregate supply will increase current inflation and the inflation gap (current inflation rate minus the target inflation rate). The decrease in aggregate demand will decrease both current inflation and the inflation gap. The target for the federal funds rate will be higher for the recession caused by a decrease in short-run aggregate supply.




Lisaclaire

  • Member
  • Posts: 569
Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it


  • Member
  • Posts:
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

Children with strabismus (crossed eyes) can be treated. They are not able to outgrow this condition on their own, but with help, it can be more easily corrected at a younger age. It is important for infants to have eye examinations as early as possible in their development and then another at age 2 years.

Did you know?

The human body's pharmacokinetics are quite varied. Our hair holds onto drugs longer than our urine, blood, or saliva. For example, alcohol can be detected in the hair for up to 90 days after it was consumed. The same is true for marijuana, cocaine, ecstasy, heroin, methamphetamine, and nicotine.

Did you know?

About 600,000 particles of skin are shed every hour by each human. If you live to age 70 years, you have shed 105 pounds of dead skin.

Did you know?

About one in five American adults and teenagers have had a genital herpes infection—and most of them don't know it. People with genital herpes have at least twice the risk of becoming infected with HIV if exposed to it than those people who do not have genital herpes.

Did you know?

A headache when you wake up in the morning is indicative of sinusitis. Other symptoms of sinusitis can include fever, weakness, tiredness, a cough that may be more severe at night, and a runny nose or nasal congestion.

For a complete list of videos, visit our video library