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

Author Question: To join the EMU, a country should have no more than A) 1.5 percent inflation rate above the ... (Read 54 times)

Zoey63294

  • Hero Member
  • *****
  • Posts: 539
To join the EMU, a country should have no more than
 
  A) 1.5 percent inflation rate above the average of the three EU member states with the highest inflation.
  B) 3 percent inflation rate above the average of the three EU member states with the lowest inflation.
  C) 4 percent inflation rate above the average of the three EU member states with the lowest inflation.
  D) 1.5 percent inflation rate above the average of the three EU member states with the lowest inflation.
  E) 2 percent inflation rate above the average of the three EU member states with the lowest inflation.

Question 2

Use the DD-AA model to compare the domestic economic response under flexible and fixed exchange rate regimes to a temporary rise in export demand from foreign countries.
 
  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

bassamabas

  • Sr. Member
  • ****
  • Posts: 294
Answer to Question 1

D

Answer to Question 2

Under floating rate: The DD curve shifts right. AA does not change because the temporary increase will not affect the long run expected exchange rate. Output rises and E falls (depreciates).
Under fixed rate: The DD curve shifts right. The central bank intervenes to prevent a change in the exchange rate. By selling domestic currency they expand the domestic supply and the AA curve shifts right, keeping E constant. Output however will rise due to the new equilibrium of the DD and AA curves to the right of its former location.




Zoey63294

  • Member
  • Posts: 539
Reply 2 on: Jun 30, 2018
Gracias!


ktidd

  • Member
  • Posts: 319
Reply 3 on: Yesterday
Wow, this really help

 

Did you know?

The average office desk has 400 times more bacteria on it than a toilet.

Did you know?

Bacteria have been found alive in a lake buried one half mile under ice in Antarctica.

Did you know?

Everyone has one nostril that is larger than the other.

Did you know?

An identified risk factor for osteoporosis is the intake of excessive amounts of vitamin A. Dietary intake of approximately double the recommended daily amount of vitamin A, by women, has been shown to reduce bone mineral density and increase the chances for hip fractures compared with women who consumed the recommended daily amount (or less) of vitamin A.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

For a complete list of videos, visit our video library