Analyze the effects of temporary increase in european supply, International Economics

Assignment Help:

Using a figure describing both the U.S. money market and the foreign exchange market, analyze the effects of a temporary increase in the European money supply on the dollar/euro exchange rate.

Answer:  A raise in the European money supply will decrease the interest rate on the euro and thus will cause the schedule of the expected euro return expressed in dollars to shift down that causing a reduction in the dollar/euro exchange rate that is an appreciation of the U.S. Dollar and the euro depreciates beside the dollar. The U.S. money supply and money demand aren't going to be affected and thus the interest rate in the U.S. will stay the same.

 

2385_Analyze the effects of temporary increase in european supply.png


Related Discussions:- Analyze the effects of temporary increase in european supply

Trams of trade, different between her barter terms of trade and net barter ...

different between her barter terms of trade and net barter terms of trade

The theory of international trade, Explain the classical theory of employme...

Explain the classical theory of employment with relaxed assumption?

Effect on gdp, The recessionary gap in a country is $1 trillion. The spendi...

The recessionary gap in a country is $1 trillion. The spending multiplier is 5. For every $50 billion borrowed, interest rates increase by 0.1 %. For every 0.1% increase in interes

ECONOMICS, In the Ricardian analysis, why does each trading partner have an...

In the Ricardian analysis, why does each trading partner have an incentive to produce at an endpoint of its production-possibility frontier? Why are prices of factors of production

Economic investigations report, The latest economic investigations report t...

The latest economic investigations report that the recent earthquake, tsunami and nuclear disaster have led to an economic recession in Japan. This recession may reduce the demand

#Myth of public goods, Summarized the basic tenets of the arguments in this...

Summarized the basic tenets of the arguments in this case

Free trade and protectionism, why is international trade important for sout...

why is international trade important for south Africa?.

Does the existence of non-tradable goods allow for deviation, Does the exis...

Does the existence of non-tradable goods allow for deviations from Purchasing Power Parity? Answer:  Yes the continuation of non-tradable goods permits deviations from Purchas

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

International trade, briefly summaries the alternative explanation to the ...

briefly summaries the alternative explanation to the theory of international trade?

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