1. The United States Dollar and Indian Rupee are traded in flexible currency markets. a. Draw...

 

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1. The United States Dollar and Indian Rupee are traded in flexible currency markets. a. Draw a properly labeled graph of the foreign exchange market for each of the currencies above. b. Show the effects on the supply or demand of each currency based on the scenario below (use proper labeling): i. Speculators believe that the value of the dollar will go up in the near future. c. What happened to the value of the Rupee (appreciated or depreciated)? d. Draw a properly labeled macroeconomic model for United States with an inflationary gap, making sure to show: i. ii. The long-run equilibrium output, labeled Yf The current equilibrium output and price levels, labeled Ye and PLe, respectively e. Show how the change in the value of the Dollar would affect The United State's aggregate demand. 1. The United States Dollar and Indian Rupee are traded in flexible currency markets. a. Draw a properly labeled graph of the foreign exchange market for each of the currencies above. b. Show the effects on the supply or demand of each currency based on the scenario below (use proper labeling): i. Speculators believe that the value of the dollar will go up in the near future. c. What happened to the value of the Rupee (appreciated or depreciated)? d. Draw a properly labeled macroeconomic model for United States with an inflationary gap, making sure to show: i. ii. The long-run equilibrium output, labeled Yf The current equilibrium output and price levels, labeled Ye and PLe, respectively e. Show how the change in the value of the Dollar would affect The United State's aggregate demand.

Answer rating: 100% (QA)

a Graphs of the Foreign Exchange Market Graph for the United States Dollar USD Graph for the Indian ... View the full answer