This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain why in an economy with fixed exchange rates, monetary policy will not cause expenditure ... (Read 137 times)

JMatthes

  • Hero Member
  • *****
  • Posts: 578
on: Jun 30, 2018
Explain why in an economy with fixed exchange rates, monetary policy will not cause expenditure switching.
 
  What will be an ideal response?

Question 2

The graph above shows the PPC for a country that can produce oil or televisions. The straight line is the trade line and CPC if production is at Point A. Which of the following is a true statement?
 
  A) This country should produce relatively more oil and relatively fewer televisions.
  B) This country should produce relatively more televisions and relatively less oil.
  C) This country should produce more of both goods.
  D) This country is producing the optimal mix of oil and televisions to maximize its income.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

macmac

  • Sr. Member
  • ****
  • Posts: 343
Reply #1 on: Jun 30, 2018
Answer to Question 1

Expenditure switching refers to switching back and forth between domestic and foreign goods, in this case, in response to a change in the exchange rate. Expenditure switching magnifies the effects of monetary policy when rates are flexible. In an economy with a fixed exchange rate, changes in the money supply will not cause expenditure switching because the exchange rate does not change.

Answer to Question 2

A


JMatthes

  • Member
  • Posts: 578
Reply 2 on: Jun 30, 2018
YES! Correct, THANKS for helping me on my review

Zebsrer

  • Member
  • Posts: 284
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Lower drug doses for elderly patients should be used first, with titrations of the dose as tolerated to prevent unwanted drug-related pharmacodynamic effects.

Did you know?

As many as 28% of hospitalized patients requiring mechanical ventilators to help them breathe (for more than 48 hours) will develop ventilator-associated pneumonia. Current therapy involves intravenous antibiotics, but new antibiotics that can be inhaled (and more directly treat the infection) are being developed.

Did you know?

Patients who cannot swallow may receive nutrition via a parenteral route—usually, a catheter is inserted through the chest into a large vein going into the heart.

Did you know?

Cytomegalovirus affects nearly the same amount of newborns every year as Down syndrome.

Did you know?

The most destructive flu epidemic of all times in recorded history occurred in 1918, with approximately 20 million deaths worldwide.

Rates of water loss by two turtles and a tortoise indicate an inverse relationship between the dryne Rates of water loss by two turtles and a tortoise indicate an inverse relationship between the dryne
environmental policy environmental policy
This chart illustrates the four quadrants in which we can place the relationships between the state This chart illustrates the four quadrants in which we can place the relationships between the state
A comparison of adiabatic and environmental cooling rates. A comparison of adiabatic and environmental cooling rates.
The respiratory system and the process of gas exchange The respiratory system and the process of gas exchange
Types of policy Types of policy
Video: Immune responses Animation

For a complete list of videos, visit our video library