1.Explain how permanent shifts in national real money demand functions affect real and nominal exchange rates...
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1.Explain how permanent shifts in national real money demand functions affect real and nominal exchange rates in the long run. 2.Imagine that two identical countries have restricted imports to identical levels, but that one has done so using tariffs while the other has done so using quotas. After these policies are in place, both countries experience identical, balanced expansions of domestic spending. Where should the demand expansion cause a greater real currency appreciation, in the tariff-using country or in the quota-using country? 1.Explain how permanent shifts in national real money demand functions affect real and nominal exchange rates in the long run. 2.Imagine that two identical countries have restricted imports to identical levels, but that one has done so using tariffs while the other has done so using quotas. After these policies are in place, both countries experience identical, balanced expansions of domestic spending. Where should the demand expansion cause a greater real currency appreciation, in the tariff-using country or in the quota-using country?
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1 A permanent shift within the real money demand function will alter the longrun equilibrium nominal ... View the full answer
Related Book For
International Economics Theory and Policy
ISBN: 978-0273754206
9th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc J. Melitz
Posted Date:
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