Analyze the effects of an increase in the u.s. money supply, International Economics

Assignment Help:

By Using the figure describing both the U.S. money market and The foreign exchange market, analyze the effects of an increase in the U.S. money supply on the dollar or euro exchange rate.

Answer: A elevate in the U.S. money supply will origins the interest rate to decrease.  This must increase investment and possibly consumption of durable goods.  The decrease in the interest rate will cause a movement to the left along the schedule depicting the expected euro return expressed in dollars.  The result is an enhancement in E or a depreciation of the dollar.

1976_analyze the effects of an increase in the U.S. money supply.png


Related Discussions:- Analyze the effects of an increase in the u.s. money supply

Differencial treatment, difference between differencial treatment in revers...

difference between differencial treatment in reverse andspecial and differencial treatment

Explain why the exchange rate model, Q. Explain why the exchange ra...

Q. Explain why the exchange rate model based on PPP is a long-run theory. Answer: PPP theory is a financial approach to the exchange rate. It is a long-run theory for

Capital gain in high inflation economy, Hello, I rent an appartment in Braz...

Hello, I rent an appartment in Brazil, a country known for its high inflation rates, but I live in Switzerland. Does this mean when I exchange Reais to Swiss Francs (in a +- consta

Asset and output markets are out of equilibrium, Q. Use a figure to study t...

Q. Use a figure to study the following question: Consider that the economy is at a point on the DD-AA schedule that is above both AA and DD, where both the asset and output markets

Evaluate the credit risk analysis, Question : Banks find it more profit...

Question : Banks find it more profitable to lend money as the margin on lending is much higher than any other banking activity. However, banks have to assess credit risks and t

Explain the concepts of trade creation, When asked by the Carnegie Commissi...

When asked by the Carnegie Commission to prepare a report on post war Preferential Trading Agreements, Viner (1950) pointed out that they are not free trade. He used the concepts o

Explain the characteristics of developing countries, Question: The Maur...

Question: The Mauritian experience of growth and development has been referred as an economic miracle. The island had successfully shifted from an agrarian

Absolute advantage by adam smith, which book by adam smith explains the abs...

which book by adam smith explains the absolute advantage ?

Analysis of an international relations, International Relations (IR) G...

International Relations (IR) Goal : The goal of this writing assignment is for you to hone your skills in identifying accuracy or bias in movies or in "alternative" documentar

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd