Draw the initial equilibrium for the domestic economy in the IS-LM-IP diagram. Then, draw the new equilibrium of the domestic economy after sanctions are imposed. (For this question only, assume) Foreign output Y*and interest rate i* are fixed.
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Draw the initial equilibrium for the domestic economy in the IS-LM-IP diagram. Then, draw the new equilibrium of the domestic economy after sanctions are imposed. (For this question only, assume) Foreign output Y*and interest rate i* are fixed.
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- The DD-AA model to the right shows an economy's short-run equilibrium at point 1. Note: 'E' = Es/E: Suppose the government imposes a temporary tariff on all imports. Exchange Rate, E Using the line drawing tool, show the impact of this commercial policy. Properly label this line. Carefully follow the instructions above and only draw the required object. DD1 DD2 According to your graph, the domestic economy will experience E 1 A. a rise in output and a currency depreciation. B. a rise in output and a currency appreciation. Now suppose that with the passage of time it becomes increasingly clear that the tariff will be permanent. This will induce participants in the foreign exchange market to revise their expectations. More specifically, the expected future exchange rate, E°, will decrease. AA1 In the DD-AA model, this revised expectation of the future exchange rate will cause y1 Output, Y O A. a rightward shift in the DD schedule, and thus a reinforcement of the effects produced by the…Q2-9 The shape of the curve that shows the effect of currency depreciation upon a country's current account balance over time (with the curve itself being known as the _____) reflects the fact that short-run demand elasticities are sufficiently ______ than long-run elasticities.(Ignore the negative sign on the elasticities.) Select one: a. J curve / lower b. J curve / higher c. supply curve of foreign exchange / lower d. supply curve of foreign exchange / higherConsider an open economy operating under fixed exchange rates. Using the goods market equilibrium condition, illustrate the effect of an increase in the foreign interest rate i * on domestic output and net exports. Explain and give economic intuition for your answer.
- Macmillan Learning The diagram shows the market equilibrium exchange rate between the South African rand and the U.S. dollar (USD). Recently, due to a shift in global demand, South African exports have decreased. Shift the demand and supply curves as appropriate. Exchange rate (USD per rand) X Quantity of rand Supply Demand As a result of the change in the exchange rate, South Africa's current account balance will rise, and its financial account balance will fall. both South Africa's current account balance and its financial account balance will rise. both South Africa's current account balance and its financial account balance will fall. South Africa's current account balance will fall, and its financial account balance will rise.U S foreign exchange intervention is sometimes done by an Excha U.S. foreign exchange intervention is sometimes done by an Exchange Stabilization Fund, or ESF (a branch of the Treasury Department), which manages a portfolio of U.S. government and foreign currency bonds. An ESF intervention to support the yen, for example, would take the form of a portfolio shift out of dollar and into yen assets. Show that ESF interventions are automatically sterilized and thus do not alter money supplies. How do ESF operations affect the foreign exchange risk premium? U S foreign exchange intervention is sometimes done by an ExchaAssume a trade neutral position at the start. Assess the simultaneous impact of the following on the world interest rate and trade balances of both economies: i) A new production technology in the ROW economy ii) Increase in Investments in Home Assume that the effect on Net Exports of ROW is more pronounced.
- Consider the goods market for a small open economy, where e is the real exchange rate, X are exports, IM are imports and Y* is foreign income., C- 268 + 0.55YD X= 0.18Y - 107e 1=0.15Y - 786 I G= 930 T= 1000 IM = 0.7Y + 113e Y=3749 i= 0.01 (1%) e= 1 Claculate the level of equilibrium output and the trade balance in this economy: OA. Y=1117.96; NX = -307.35 OB. Y= 1094.96; NX= -311.65 OC. Y= 1076.09; NX= -303.78 OD. Y= 1136.26, NX = -317.95"Analyze the impact of a significant increase in international oil prices on a country's macroeconomic indicators such as inflation, GDP growth, and current account balance. Consider the perspectives of both oil- importing and oil-exporting countries. How might the respective governments and central banks respond to stabilize their economies and mitigate any adverse effects?"Answer the given question with a proper explanation and step-by-step solution. Suppose that εD = 0.70 and ε_D^F = 0.50 for a given country: Suppose that the foreign currency price of this country’s exports falls by 18% following a devaluation. What will happen to the quantity of exports?
- Country C is a highly trade-dependent economy operating under a managed float exchange rate system. For over a decade it has been experiencing near full employment and has had a current trade surplus position. Due to a pandemic that resulted in a financial crisis, the major trading partners of Country C have experienced severe economic recession and have reduced their imports from Country C. Analyse and explain the effects of the trading partner’s recession on Singapore. Your discussion should include the exports, imports, money supply and international financial flows as well as a suitable foreign exchange market diagram.We look at the trade of gas between Russia and the EU and assumes that both areas' supply curves slope upwards and their demand curves slope downwards in the diagram with quantity on the horizontal axis and price on the vertical axis. To make the situation simple, we also initially assume that the exchange rate is constant, and it is 1 (so that we do not need to differentiate between the prices i Russia and the EU). In the autarky equilibria, prices are higher in the EU than in Russia. Unless otherwise specified, there are no trading costs, and the capacity of the pipelines is not binding (ie with free trade the prices are basically the same in the EU and Russia). (a) Draw and show the supply of export goods and the demand for import goods in relation to the two areas' supply and demand curves (three islands next to each other). (b) What happens (to welfare in the two countries and consumer surplus/producer surplus) if the EU stops importing Russian gas? (c) Without Nord Stream 1/2 in…Everything else the same, if the Brazilian real depreciates, that is expected to increase the Brazilian exports. True. False.