Suppose that the demand for dollars is given by the equation D$ 2,800 200ex and the supply of dollars is given by the equation S$ 400 100ex Therefore the equilibrium exchange rate is your answer to part b of problem 3 (a) Suppose that there is a change in U S fiscal policy that reduces the demand for dollars by 200 billion and increases the supply of dollars by 100 billion at each exchange rate Explain if the capital outflows are caused by a decrease in defense spending or an increase in governments health care spending Calculate the new demand for dollars and the new supply of dollars at each exchange rate and graph the new demand and supply curves What is the new equilibrium exchange rate (b) Suppose that there is a change in U S monetary policy that increases the demand for dollars by 400 billion and decreases the supply of dollars by 200 billion at each exchange rate Explain if the capital inflows are caused by an expansionary or contractionary monetary policy Calculate the new demand for dollars and the new supply of dollars at each exchange rate and graph the new demand and supply curves What is the new equilibrium exchange rate

Question: Suppose that the demand for dollars is given by the equation D$ = 2,800 - 200ex and the supply of dollars is given by the

Suppose that the demand for dollars is given by the equation D$ = 2,800 - 200ex and the supply of dollars is given by the equation S$ = 400 + 100ex. Therefore the equilibrium is your answer to part b of problem 3.
(a) Suppose that there is a change in U.S. fiscal policy that reduces the demand for dollars by 200 billion and increases the supply of dollars by 100 billion at each Explain if the capital outflows are caused by a decrease in defense spending or an increase in government’s health care spending. Calculate the new demand for dollars and the new supply of dollars at each and graph the new demand and supply curves. What is the new equilibrium Suppose that there is a change in U.S. monetary policy that increases the demand for dollars by 400 billion and decreases the supply of dollars by 200 billion at each Explain if the capital inflows are caused by an expansionary or contractionary monetary policy. Calculate the new demand for dollars and the new supply of dollars at each and graph the new demand and supply curves. What is the new equilibrium

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