« previous next »

Author Question: Illustrate with a graph the effects of fiscal policy when exchange rates are fixed. What will be ... (Read 123 times)

plus1

  • Hero Member
  • *****
  • Posts: 676
on: Jun 30, 2018
Illustrate with a graph the effects of fiscal policy when exchange rates are fixed.
 
  What will be an ideal response?

Question 2

What are the factors affecting the demand for foreign currency?
 
  What will be an ideal response?


Awesome

  • Sr. Member
  • ****
  • Posts: 280
Reply #1 on: Jun 30, 2018
Answer to Question 1

Draw horizontal BP curve. Fiscal policy shifts IS. Monetary policy must accommodate by shifting LM to match IS in order to maintain fixed exchange rate.

Answer to Question 2

Three factors affect the demand for foreign currency. They are expected return, risk, and liquidity.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

The ratio of hydrogen atoms to oxygen in water (H2O) is 2:1.

Did you know?

Asthma occurs in one in 11 children and in one in 12 adults. African Americans and Latinos have a higher risk for developing asthma than other groups.

Did you know?

Illness; diuretics; laxative abuse; hot weather; exercise; sweating; caffeine; alcoholic beverages; starvation diets; inadequate carbohydrate consumption; and diets high in protein, salt, or fiber can cause people to become dehydrated.

Did you know?

The average human gut is home to perhaps 500 to 1,000 different species of bacteria.

Neurohumoral effects of heart failure Neurohumoral effects of heart failure
Effects of PYY on Activity of the Hypothalamus and OFC Effects of PYY on Activity of the Hypothalamus and OFC
Summary of the Effects of Massage Cont. Summary of the Effects of Massage Cont.
How to use transformations to graph quadratic equations in vertex form How to use transformations to graph quadratic equations in vertex form
Preterm birth rates, by single and multiple births, Canada Preterm birth rates, by single and multiple births, Canada
Fraction of obese individuals by state in 1998 and 2008. In 1998, 42 states had obesity rates below Fraction of obese individuals by state in 1998 and 2008. In 1998, 42 states had obesity rates below
Video: Blood Test Basics

For a complete list of videos, visit our video library