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

Author Question: Please use a figure to discuss whether or not a devaluation under a fixed exchange rate has the same ... (Read 128 times)

itsmyluck

  • Hero Member
  • *****
  • Posts: 546
on: Jun 30, 2018
Please use a figure to discuss whether or not a devaluation under a fixed exchange rate has the same long-run effect as a proportional increase in the money supply under a floating rate.
 
  What will be an ideal response?

Question 2

In 1929, government purchases accounted for
 
  A) only 18.5 percent of U.S. GNP.
  B) only 8.5 percent of U.S. GNP.
  C) 28.5 percent of U.S. GNP.
  D) 38.5 percent of U.S. GNP.
  E) 48.5 percent of U.S. GNP.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

dominiqueenicolee

  • Sr. Member
  • ****
  • Posts: 314
Reply #1 on: Jun 30, 2018
Answer to Question 1

A currency devaluation shifts the AA schedule outward from equilibrium point 1 to equilibrium point 2. The devaluation does not change long-run demand or supply conditions in the output market. Thus, the increase in the long-run price level will exactly offset the increase in exchange rate. Thus, a devaluation is neutral in the long run and this is the exact same scenario as for an increase in the money supply under a floating exchange rate.

Answer to Question 2

B


itsmyluck

  • Hero Member
  • *****
  • Posts: 546
Reply #2 on: Jun 30, 2018
Thank you


dominiqueenicolee

  • Sr. Member
  • ****
  • Posts: 314
Reply #3 on: Jun 30, 2018
No problemo


« previous next »
 

Did you know?

Long-term mental and physical effects from substance abuse include: paranoia, psychosis, immune deficiencies, and organ damage.

Did you know?

Patients should never assume they are being given the appropriate drugs. They should make sure they know which drugs are being prescribed, and always double-check that the drugs received match the prescription.

Did you know?

Vital signs (blood pressure, temperature, pulse rate, respiration rate) should be taken before any drug administration. Patients should be informed not to use tobacco or caffeine at least 30 minutes before their appointment.

Did you know?

Bacteria have been found alive in a lake buried one half mile under ice in Antarctica.

Did you know?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Primary production is positively correlated with the evapotranspiration rate. Primary production is positively correlated with the evapotranspiration rate.
Acceptable ranges of respiratory rate Acceptable ranges of respiratory rate
Advection of an air mass with a different ELR (environmental lapse rate). Advection of an air mass with a different ELR (environmental lapse rate).
Fixed bed state (i) and complete fluidization (ii) Fixed bed state (i) and complete fluidization (ii)
The rate of replacement of a recessive allele d by the dominant allele D by mutation alone. Even tho The rate of replacement of a recessive allele d by the dominant allele D by mutation alone. Even tho
Forces affecting capillary exchange Forces affecting capillary exchange
Video: Glomerubular filtrate rate -pressures that affect GFR and net filtration pressure

For a complete list of videos, visit our video library