Author Question: Under a fixed exchange rate regime, expansionary fiscal policy will tend to cause which of the ... (Read 92 times)

erika · **on:** Jun 30, 2018

Under a fixed exchange rate regime, expansionary fiscal policy will tend to cause which of the following?

A) an increase in imports
B) an increase in net exports
C) a reduction in investment
D) all of the above

Question 2

In the model where it is assumed that the state of technology does not change, what parameters and/or variables cause changes in steady state output per worker.

What will be an ideal response?

moormoney · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

A

Answer to Question 2

In general, output per worker will depend on the capital-labor ratio. The equilibrium capital-labor ratio will depend on the saving rate and on the rate of depreciation. Output will also depend on the amount of human capital per worker. So, changes in s, , and H will cause changes in output per worker.