« previous next »

Author Question: Illustrate the effectiveness of monetary policy with fixed exchange rates. What will be an ideal ... (Read 116 times)

ETearle

  • Hero Member
  • *****
  • Posts: 580
on: Jun 30, 2018
Illustrate the effectiveness of monetary policy with fixed exchange rates.
 
  What will be an ideal response?

Question 2

Fiscal expansion under fixed exchange rates will have what temporary effect?
 
  A) the money supply will decrease.
  B) output will decrease.
  C) the exchange rate will increase.
  D) the exchange rate will decrease.
  E) there will be no effect.


mariahkathleeen

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jun 30, 2018
Answer to Question 1

The required intervention to maintain the fixed exchange rate will undo any effect on income of an increase or decrease in the money supply. Illustrate by shifting LM curve and then explaining how intervention will return LM to original position.

Answer to Question 2

D


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

The National Institutes of Health have supported research into acupuncture. This has shown that acupuncture significantly reduced pain associated with osteoarthritis of the knee, when used as a complement to conventional therapies.

Did you know?

Eating food that has been cooked with poppy seeds may cause you to fail a drug screening test, because the seeds contain enough opiate alkaloids to register as a positive.

A fixed action pattern elicited by a sign stimulus. A fixed action pattern elicited by a sign stimulus.
French and U.S. presidential elections in 2012 illustrate the durability of political culture and ho French and U.S. presidential elections in 2012 illustrate the durability of political culture and ho
The lower respiratory tract and the process of gas exchange. The lower respiratory tract and the process of gas exchange.
Exchange of gases between lungs and blood. High concentration of CO2 in blood capillary entering the ... Exchange of gases between lungs and blood. High concentration of CO2 in blood capillary entering the ...
The RecA strand exchange reaction as shown from single-molecule studies The RecA strand exchange reaction as shown from single-molecule studies
Saving and Investment Rates of Industrialized Countries, 1960–1974 Saving and Investment Rates of Industrialized Countries, 1960–1974
Video: Dissociative Disorders (Part 2)

For a complete list of videos, visit our video library