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Author Question: What event started the Asian financial crisis in 1997? A) Indonesia's inability to pay its debts ... (Read 86 times)

azncindy619

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on: Jun 30, 2018
What event started the Asian financial crisis in 1997?
 
  A) Indonesia's inability to pay its debts
  B) devaluation of Indonesia's currency
  C) Thailand's inability to pay its debts
  D) devaluation of Thailand's currency
  E) devaluation of Malaysia's currency

Question 2

Demonstrate how a permanent fiscal expansion will not increase output in the long run.
 
  What will be an ideal response?


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babybsemail

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

D

Answer to Question 2

(1 ) E on Y-axis, Y on X-axis
(2 ) DD shifts right
(3 ) temporary equilibrium where E lower and Y increased
(4 ) permanent increase in demand caused by increase in G causes currency to appreciate: AA shifts left
(5 ) therefore Y returns to original levels, E decreases even more
RESULT of permanent fiscal expansion: currency appreciation, output does not change. This effect is called crowding out.


azncindy619

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

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Reply 3 on: Yesterday
Gracias!

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