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 49 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
Wow, this really help


Alyson.hiatt@yahoo.com

  • Member
  • Posts: 354
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

No drugs are available to relieve parathyroid disease. Parathyroid disease is caused by a parathyroid tumor, and it needs to be removed by surgery.

Did you know?

Asthma cases in Americans are about 75% higher today than they were in 1980.

Did you know?

The first successful kidney transplant was performed in 1954 and occurred in Boston. A kidney from an identical twin was transplanted into his dying brother's body and was not rejected because it did not appear foreign to his body.

Did you know?

A recent study has found that following a diet rich in berries may slow down the aging process of the brain. This diet apparently helps to keep dopamine levels much higher than are seen in normal individuals who do not eat berries as a regular part of their diet as they enter their later years.

Did you know?

In 2012, nearly 24 milliion Americans, aged 12 and older, had abused an illicit drug, according to the National Institute on Drug Abuse (NIDA).

For a complete list of videos, visit our video library