Consider a small open economy that fixes its currency to gold. This country can freely conduct domestic monetary policy to respond to domestic unemployment and inflation conditions only if it also imposes controls on capital mobility. True or False? Explain. (macroeconomics)
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Consider a small open economy that fixes its currency to gold. This country can freely conduct domestic
True or False? Explain.
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- How does the introduction of adjustment cost and imperfect competition alter the modelling of investment? “Even now that most monetary policy is conducted by independent monetary authorities, there is still the problem that politicians may pursue fiscal policies that are incompatible with stable inflation”. Briefly discuss this assertion with respect to Ghana.An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, the following identity must remain true: Net Capital Outflow = Net Exports In other words, if a transaction directly affects the left side of this equation, then it must also affect the right side. The following problem will help you understand why this identity must hold. Suppose you are the purchasing manager for a large chain of restaurants in the United States, and you need to make your semiannual purchase of tea. You pay $1,500,000 for a shipment of tea from an Indian tea producer. Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column. Hint: The magnitude of change should always be positive,…An open economy interacts with the rest of the world through its involvement in world markets for goods and services and world financial markets. Although it can often result in an imbalance in these markets, the following identity must remain true:Net Capital Outflow = Net Exports In other words, if a transaction directly affects the left side of this equation, then it must also affect the right side. The following problem will help you understand why this identity must hold.Suppose you are the purchasing manager for a large chain of restaurants in the United States, and you need to make your semiannual purchase of tea. You pay $1,500,000 for a shipment of tea from an Indian tea producer.Determine the effects of this transaction on exports, imports, and net exports in the U.S. economy, and enter your results in the following table. If the direction of change is "No change," enter "0" in the Magnitude of Change column.Hint: The magnitude of change should always be positive, regardless…
- What is International Monetary Fund? Explain how it works for the economic development of member countries. (700 words)In your macroeconomic lectures you are often told that exchange rates and interest rates are important for macroeconomic decision-making. How does an increase in Japan’s government budget deficit affect each of the following? The real interest rate in the short run in Japan. Explain. Private domestic investment in plant and equipment in Japan. Draw a correctly labeled graph of the foreign exchange market for the euro, and show the effect of the change in the real interest rate in Japan from part (a)(i) on each of the following. Supply of euros. Explain. Yen price of the euro To reverse the change in the yen price of the euro identified in part (b) (ii), should the European Central Bank buy or sell euros in the foreign exchang market? Explain.Consider a country that fixes the value of its currency to gold. This country can freely conduct domestic monetary policy to respond to unemployment and inflation conditions only if it also imposes controls on capital mobility. True/False. Remember to include your explanation.
- (a) There are two countries in the world, Australia and Japan. Suppose that the central bank of Australia lowers the real interest rate, while the central bank of Japan raises the real interest rate. In this case, the nominal exchange rate (Yen/Dollar) increases. Answer true or false. Please briefly explain your answer. (b) Argentina is an open economy. Suppose that Argentina fixes the value of their currency to US dollars. If Argentina experiences hyperinflation, it can stabilize inflation by using its monetary policy freely. Answer true or false. Please briefly explain your answer.QUESTION 9 As a result of entering the world economy, Neverland experiences economic boom and its GDP goes up to y= 13250: The functions that describe consumption and investment are still the same: cd(r) = 5000 – 1000r+ 0.25Y and Id(r) = 500 – 1800r +0.2Y. The government wants to take advantage of growth and increases its expenditures to: G- 1000: What is Neverland's current account balance? Note: Type in your answer approximated to two decimal points, i.e., your answer must be of the form "999.99". I will not be able to fix correct answers that were entered incorrectly, such as "999.999" or "999,99" or "999". In case the last digit in the correct answer is zero, e.g., "999.90" or "999.00", Blackboard will automatically delete it and you should not do anything about it.Singapore is a country with an open economy. Suppose that Singapore fixes the value of their currency to UŠ dollars. If Singapore experiences hyperinflation, it can stabilise inflation by using its monetary policy freely. is it true/false why?
- ABC, Inc., a company in Georgia, produces olive oil and has no international business. Its major competitors import most of their olive oil from India and then sell it out of retail stores in the United States. How will ABC, Inc., be affected if India’s currency (the rupee) strengthens over time?trillion over the next 20 years. This will be financed through future taxes. Americans' future standard of living will increase if options: the government increases expenditures the current account goes into surplus net exports rise substantially the tax cuts produce a large increase in current and future GDPExplain the links between an expansionary monetary stimulus and the foreign exchange rate.
