6. Explain why the money supply could not be considered a policy variable in our open-economy...

6. Explain why the money supply could not be considered a policy variable in our open-economy macro model under fixed exchange rates, but it can under floating exchange rates.

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Rahul Sunny answered 2 years ago

What is money and why is it important to our economy? Are savings accounts money? Explain....

What is money and why is it important to our economy? Are savings accounts money? Explain. Is U.S. currency backed by gold or anything else? Why do people work hard to get it? What is the primary role of our banking system? Explain how banks can create money. Describe the structure and roles of the Federal Reserve.

What is money and why is it important to our economy? Are savings accounts money? Explain....

What is money and why is it important to our economy? Are savings accounts money? Explain. Is U.S. currency backed by gold or anything else? Why do people work hard to get it? What is the primary role of our banking system? Explain how banks can create money. Describe the structure and roles of the Federal Reserve.

Explain the open economy policy trilemma.

using a graph of money supply and demand, explain why a policy of setting a constant...

using a graph of money supply and demand, explain why a policy of setting a constant interest rate could be destabilizing

Monetary policy focuses on adjusting the supply of money in the economy to manage inflation and...

Monetary policy focuses on adjusting the supply of money in the economy to manage inflation and unemployment. However, it is not without it's limitations. One of the limits is that by reducing interest rates, the FED seeks to stimulate borrowing and thus purchasing. However, is there a lower limit where if rate goes down any lower people don't borrow any additional money to buy things? Some countries have reached interest rates of zero (Japan and Finland) and even taken them...

Explain why an expansionary fiscal policy is effective for a small open economy with fixed exchange rate.

Explain why an expansionary fiscal policy is effective for a small open economy with fixed exchange rate.Explain why an expansionary fiscal policy is not effective for a small open economy with flexible exchange rate.

2. Consider an open economy where the monetary authorities increase the money supply. a) What are...

2. Consider an open economy where the monetary authorities increase the money supply. a) What are the instruments available for the Bank of Canada to conduct Monetary Policy? Discuss each of these in context and the practical applications thereof. b) Explain how targeting the money supply and targeting the overnight rate work in practice. Why does the Bank of Canada prefer targeting the overnight rate? c) Using an appropriate graphical representation, describe the monetary transmission mechanism as it pertains to...

Question Set 6: Effectiveness of Monetary and Fiscal Policy in an Open Economy Respond to and...

Question Set 6: Effectiveness of Monetary and Fiscal Policy in an Open Economy Respond to and answer the following prompts and questions: Why does monetary policy have a greater effect on aggregate demand in an open economy than in a closed economy? Why does fiscal policy have a smaller effect on aggregate demand in an open economy than in a closed economy? Assume our macroeconomic goals now include price level stability, full employment, economic growth, and exchange rate stability. Assume...

What happens to the money supply and the economy when the following monetary policy actions are...

What happens to the money supply and the economy when the following monetary policy actions are taken: Reserve Requirements are increased? Reserve Requirements are decreased? The Fed sells bonds? (also called quantitative tightening) The Fed buys bonds? (also called quantitative easing) Discount rate increases? Discount rate decreases?

3. Explain why an expansionary monetary policy is not useful for a small open economy with fixed exchange rate.

3. Explain why an expansionary monetary policy is not useful for a small open economy with fixed exchange rate.4.Explain why an expansionary monetary policy is effective for a small open economy with flexible exchange rate.

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6. Explain why the money supply could not be considered a policy variable in our open-economy...

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What is money and why is it important to our economy? Are savings accounts money? Explain....

What is money and why is it important to our economy? Are savings accounts money? Explain....

Explain the open economy policy trilemma.

using a graph of money supply and demand, explain why a policy of setting a constant...

Monetary policy focuses on adjusting the supply of money in the economy to manage inflation and...

Explain why an expansionary fiscal policy is effective for a small open economy with fixed exchange rate.

2. Consider an open economy where the monetary authorities increase the money supply. a) What are...

Question Set 6: Effectiveness of Monetary and Fiscal Policy in an Open Economy Respond to and...

What happens to the money supply and the economy when the following monetary policy actions are...

3. Explain why an expansionary monetary policy is not useful for a small open economy with fixed exchange rate.