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

International trade, why is international trade important for south africa

why is international trade important for south africa

calculate the gross and net national product, Given the following hypothet...

Given the following hypothetical data (in millions of naira): 1.    gross private domestic investment        N59 2.    contributors for social insurance           N8 3.    inter

Calculate the effects of the fall in the relative price, Q. Calculate the ...

Q. Calculate the effects of the fall in the relative price of good 2 on the income of the specific factors capital and land. Answer: For the reason that good 2 uses land, a f

Explain the money markets of two countries, Q. Explain the followin...

Q. Explain the following figure: Answer : The figure explicate how the money markets of two countries are linked through the foreign exchange market. The financial pol

Relationship between ppp and the law of one price, Q. Discuss the r...

Q. Discuss the relationship between PPP and the Law of One Price. Answer: The law of one price is applies to individual commodities while Purchasing Power Parity appli

Who are major participants in the foreign exchange market, Q. Who are the ...

Q. Who are the major participants in the foreign exchange market? Answer: 1. Commercial banks 2. Corporations 3. Nonblank financial institutions 4. Central banks

How can long-run values in the real exchange rate change, Q. How can ...

Q. How can long-run values in the real exchange rate change? Answer: A elevate in world relative demand for U.S output origins a long-run real appreciation of the dollar

Example of economic dualism, Q. It has been argued that economic dualism t...

Q. It has been argued that economic dualism that typifies relatively less developed or poor countries, is a barrier to participation in the global village, and lessens the chances

Gross barter terms of trade, tion..What is the range of gross barter terms ...

tion..What is the range of gross barter terms of trade ?

Income distribution effects of trade, Q. "The H.O. model remains useful as...

Q. "The H.O. model remains useful as a way to predict the income distribution effects of trade." Discus s. Answer: The Stolper-Samuelson theorem, one of the basic theorems ari

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