Explain how the aa schedule is derived, International Economics

Assignment Help:

Q. Explain how the AA schedule is derived.

Answer: For a fixed real money supply an enhancement in output leads to an increase in the domestic interest rate. In the foreign exchange market an enhancement in the domestic interest rate leads to a lower nominal exchange rate therefore appreciating the currency. Therefore the relationship among nominal exchange rate and output is negative this leads to a negative slope of the AA schedule which has the ostensible exchange rate and output on its axes.


Related Discussions:- Explain how the aa schedule is derived

Terms of trade, what is net barter terms of trade and the effect on its eco...

what is net barter terms of trade and the effect on its economy

Explain the heckscher-ohlin model and ho model , 1. Explain Pierre Bourdieu...

1. Explain Pierre Bourdieu's concepts of field, habitus, doxa, and symbolic violence. How do these concepts clarify the continued dominance of neoclassical analysis in mainstream e

Title..Haberler''s theory of oppotunity cost, Explain about constant,increa...

Explain about constant,increasing and decreasing opportunity cost

Which company will enter the market, Q. Suppose Airbus is set to give the ...

Q. Suppose Airbus is set to give the aircraft before Boeing. Which company will enter the market? Answer: Boeing will not and Airbus will produce.

Theory of internation trade, oppotunity cost theory of international trade....

oppotunity cost theory of international trade.Explanation of the theory

What can explain failure of relative ppp to hold in reality, What can expla...

What can explain the failure of relative PPP to hold in reality? Answer: Government procedures of the price level differ from country to country. One cause for these differe

Explain how the aa schedule is derived, Q. Explain how the AA schedule is d...

Q. Explain how the AA schedule is derived. Answer: For a fixed real money supply an enhancement in output leads to an increase in the domestic interest rate. In the foreign e

Explain why the distinction between debt and equity finance, Q. Explain wh...

Q. Explain why the distinction between debt and equity finance is useful in analyzing the response of developing countries to unforeseen events such as recession or terms of 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