Currency devaluation has similar effects to an expansionary fiscal policy. a. Use the ISMP model to show

Question:

Currency devaluation has similar effects to an expansionary fiscal policy.
a. Use the IS–MP model to show the effect of currency devaluation.
b. Why don’t countries with fixed exchange rates use devaluation as a common policy tool?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Macroeconomics

ISBN: 9780132109994

1st Edition

Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty

See More Books

Question Posted: Feb 04, 2016 07:03 AM

See More Questions

The graph below shows the ISMP model. Suppose that the economy is currently in equilibrium at point A. Suppose that the government pursues an expansionary fiscal policy, as shown by the shift of the...
What are the effects on interest rates and output of expansionary fiscal policy in an open economy with fixed exchange rates?
What are the effects on interest rates and output of expansionary monetary policy in an open economy with fixed exchange rates?
The table lists the actual annual cost y to drive a midsize car 15,000 miles per year for selected years X. (a) Predict whether the correlation coefficient is positive, negative, or zero. (b) Find a...
Two of your friends own and operate a business that rents bicycles and inline skates at a local lake. They have told you that they want to expand the business but are short of the money needed for...
One companys bottles of grapefruit juice are filled by a machine that is set to dispense an average of 180 milliliters (ml) of liquid. The company has been getting negative feedback from customers...
Show that the pure shrinkage estimator (Problem 9.25) is the solution to Data From Problem 9.25 The pure shrinkage estimator is defined as \(\hat{\beta}_{s}=c \hat{\beta}\), were \(0 \leq c \leq 1\)...
List the six building blocks that make up digital computers, and describe the flows of data that occur among these blocks.
What single trade discount is equivalent to the series of trade discounts 14%, 9% and 5%? Enter your answer in the blank as a percent, rounded to 2 decimal places and including the percent sign.
Consult Paragraphs 65-69 of PCAOB Auditing Standard No. 12. Based on your understanding of fraud risk assessment, what three conditions are likely to be present when a fraud occurs (the fraud...
The International Monetary Fund (IMF) makes loans of currency reserves to countries which are running out of reserves. a. How would a loan of currency reserves help a country maintain a fixed...
Unlike countries with currency problems, China has used a fixed exchange rate to keep the value of its currency below its market level. a. Why is it easier for a country to undervalue a currency than...
Use the tables to evaluate the following. x012 3 5 f(x) 1 1 2 0 2 1 x-1 3 4 3 4 4 2 4 5
Precisely how do the MPC and the APC differ? How does the MPC differ from the MPS? Why must the sum of the MPC and the MPS equal 1?
Indicate whether each of the following statements applies to microeconomics or macroeconomics: a. The unemployment rate in the United States was 3.7 percent in December 2018. b. A U.S. software firm...
If the rms phasor of a voltage is given by \(\mathrm{V}=120 / 60^{\circ}\) volts, then the corresponding \(v(t)\) is given by (a) \(120 \sqrt{2} \cos \left(\omega t+60^{\circ}ight)\) (b) \(120 \cos...
Identify each of the following situations as something that either promotes growth or retards growth. a. Increasing corruption allows government officials to steal peoples homes. b. A nation...
The average value of a double-frequency sinusoid, \(\sin 2(\omega t+\delta)\), is given by (a) 1 (b) \(\delta\) (c) Zero
Sketch the appropriate curves. A calculator may be used. An analysis of data shows that the mean density d (in mg/cm 3 ) of a calcium compound in the bones of women is given by d = 139.3 + 48.6...
What services are provided by the provincial and territorial governments?
Explain how the rise and fall of the investment-GDP ratio from 198084 and 200610 shifted the IS curve. Using the data presented in the box on pages 7475, compare how much the IS curve shifted during...
Consider an economy in which all taxes are autonomous and the following values of autonomous consumption, planned investment, government expenditure, autonomous taxes, and the marginal propensity to...
Consider an economy in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate...
a) Based on the information provided in the table below: i. Describe the impact of the cost behavior on economies of scale, constant returns to scale, and diseconomies of scale in each firm?...
Use the following information to answer questions below: Total current assets Total non-current assets Total current liabilities Long-term borrowings Share capital Revenue Gross profit Retained...
A Public Information Officer ( PIO ) for a public safety or emergency management agency might expect to spend what portion of his or her time on activities directly related to incident response or...

Currency devaluation has similar effects to an expansionary fiscal policy. a. Use the ISMP model to show

Question:

Step by Step Answer:

a Graph should show a shift to the right shift of the IS curve as exports increas...View the full answer

Macroeconomics

Students also viewed these Chemical Engineering questions