For each of the following events analyze the impact in the Goods and Services market. Assume...
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For each of the following events analyze the impact in the Goods and Services market. Assume the economy begins at a long-run equilibrium unless otherwise specified. 1. Suppose the exchange rate value of a country's currency decreases. a. Given the various shifters presented in the book/lecture notes, which curve(s) shifts first and why? Show the graph of the Goods and Services market, including the shift. b. What happened to the price level and RGDP in the short-run? c. Will this cause a temporary business cycle? Why or why not? Show any additional shifts in the graph above. For each of the following events analyze the impact in the Goods and Services market. Assume the economy begins at a long-run equilibrium unless otherwise specified. 1. Suppose the exchange rate value of a country's currency decreases. a. Given the various shifters presented in the book/lecture notes, which curve(s) shifts first and why? Show the graph of the Goods and Services market, including the shift. b. What happened to the price level and RGDP in the short-run? c. Will this cause a temporary business cycle? Why or why not? Show any additional shifts in the graph above.
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