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 54 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
Excellent

AISCAMPING

  • Member
  • Posts: 347
Reply 3 on: Yesterday
:D TYSM

« previous next »
 

Did you know?

It is believed that the Incas used anesthesia. Evidence supports the theory that shamans chewed cocoa leaves and drilled holes into the heads of patients (letting evil spirits escape), spitting into the wounds they made. The mixture of cocaine, saliva, and resin numbed the site enough to allow hours of drilling.

Did you know?

Serum cholesterol testing in adults is recommended every 1 to 5 years. People with diabetes and a family history of high cholesterol should be tested even more frequently.

Did you know?

Intradermal injections are somewhat difficult to correctly administer because the skin layers are so thin that it is easy to accidentally punch through to the deeper subcutaneous layer.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

Multiple experimental evidences have confirmed that at the molecular level, cancer is caused by lesions in cellular DNA.

The enhancement effect observed by Emerson. The enhancement effect observed by Emerson.
Effect of extracellular osmolarity on water movement across a plasma membrane Effect of extracellular osmolarity on water movement across a plasma membrane
Sensory and Emotional Components of Pain Sensory and Emotional Components of Pain
The population of Asia increases rapidly, the demand for food and water is also growing The population of Asia increases rapidly, the demand for food and water is also growing
Effect of Education on Wages Effect of Education on Wages
Key foreign policy agencies Key foreign policy agencies
Video: Regulation of GFR: autoregulation via tubuloglomerular feedback, neural & hormonal regulation

For a complete list of videos, visit our video library