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Domestic consumer confidence on home output

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Reference no: EM132422443

Compare the effects of a rise in domestic consumer confidence on home output and investment under a floating and a fixed exchange rate. How does the trade balance respond under each of these exchange rate regimes in the short run?

How to explain that a monetary expansion at home affects output and investment in the home country under a floating and a fixed exchange rate.

Lastly, consider two countries with a floating exchange rate. How does a monetary expansion in the foreign country affect the home economy? If the home country central bank cares only about national output, how should it adjust its policy?

Reference no: EM132422443

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