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Author Question: Illustrate with a graph the effects of monetary policy on the economy when exchange rates are ... (Read 57 times)

ENagel

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on: Jun 30, 2018
Illustrate with a graph the effects of monetary policy on the economy when exchange rates are flexible.
 
  What will be an ideal response?

Question 2

The Lost Decade refers to the years between approximately
 
  A) 1975 and 1985.
  B) 1980 and 1990.
  C) 1987 and 1997.
  D) 1972 and 1980.
  E) 1960 and 1970.


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ecabral0

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Reply #1 on: Jun 30, 2018
Answer to Question 1

Assume perfect asset substitutability and capital mobility, so the BP curve is horizontal. Shifts in LM will be matched by shifts in IS so that income changes but the interest rate is fixed.

Answer to Question 2

B


ENagel

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Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

isabelt_18

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Reply 3 on: Yesterday
Excellent

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