Why is fiscal policy less effective

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Why is fiscal policy less effective with flexible exchange rates than with fixed?

Reference no: EM132479172

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Countries that run persistent trade deficits : Explain the claim: "Countries that run persistent trade deficits are also net borrowers."
Open economy with fixed exchange rates : Assume you run the central bank of a small open economy with fixed exchange rates. Output, unemployment and inflation are where you want them to be.
Now the fiscal authorities pass a large tax cut : Now the fiscal authorities pass a large tax cut. What policy should you follow to stabilize output? What effects do you anticipate?
Compute and assume the contract matures in four years : Compute and assume the contract matures in four years. Compute the mark-to-market value of the following short forward NZD (New Zealand Dollar) contract.
Why is fiscal policy less effective : Why is fiscal policy less effective with flexible exchange rates than with fixed?
Why is monetary policy less effective with fixed exchange : Why is monetary policy less effective with fixed exchange rates than with flexible?
Determine mark-to-market value of the short forward gbp : Determine mark-to-market value of the following short forward GBP contract. The size of the contract is GBP 3,800,000 and the forward rate is F3USD/GBP = 1.34
Why is monetary policy less effective : The next three questions use our short-run open-economy model, assuming perfect capital mobility.
Determine and compute the mark-to-market value : Determine and Compute the mark-to-market value of the following long forward Australian Dollar (AUD) contract. The size of the contract is AUD 1,000,000

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