Describe how fiscal policy works (with 2nd round effects) under both a fixed exchange rate system...

Describe how fiscal policy works (with 2^nd round effects) under both a fixed exchange rate system and a floating exchange rate system. Assume that there is capital mobility. How did Australia’s exchange rates change after the fiscal stimulus of 2008? Does that support or contradict macroeconomic theory?

Expert Solution

Rahul Sunny answered 2 years ago

1. What are the effects of fiscal policy under both fixed and floating exchange rates? 2....

1. What are the effects of fiscal policy under both fixed and floating exchange rates? 2. What are the effects of monetary policy under both fixed and flexible exchange rates? 3. What are the strength/weaknesses of fiscal vs. monetary policy under fixed and floating exchange rates?

What are the effects of temporary monetary and fiscal policies under flexible vs. fixed exchange rate...

What are the effects of temporary monetary and fiscal policies under flexible vs. fixed exchange rate systems in the short run? Show using both the FX and Money Market graphs and the AA-DDmodel

9. “Under fixed exchange rates the monetary policy is impotent, but the fiscal policy is effective.”...

9. “Under fixed exchange rates the monetary policy is impotent, but the fiscal policy is effective.” Do you agree? Explain. 10. “Chronic budget deficits mean ever-accumulating, unsustainable public debt.” Do you agree? Explain why or why not. Make sure to address the following questions in your essay: a. What is the relationship between public deficits and debt? b. What is meant by “sustainable debt”? How do you know whether the public debt sustainable? c. How is it possible for chronic...

Suppose that under a fixed exchange rate system, a country starts at both internal and external...

Suppose that under a fixed exchange rate system, a country starts at both internal and external balance. What happens to the internal and external balance curves if investment spending falls in the rest of the world?

Explain how exchange rates are determined under the fixed exchange rate system. Then, thoroughly discuss the...

Explain how exchange rates are determined under the fixed exchange rate system. Then, thoroughly discuss the advantages and disadvantages of the fixed exchange rate system.

Discuss the effectiveness of the monetary policy in the fixed exchange rate system?

Describe the pros and cons of a fixed exchange rate system.

The effectiveness of monetary policy in influencing national income will, under a system of fixed exchange...

The effectiveness of monetary policy in influencing national income will, under a system of fixed exchange rates, be ________ under a system of flexible exchange rates. select one: a. greater than b. less than c. perhaps greater than, perhaps less than d. the same as

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.

Compare the effectiveness of monetary and fiscal policies under fixed and flexible exchange rate regimes(temporary &...

Compare the effectiveness of monetary and fiscal policies under fixed and flexible exchange rate regimes(temporary & short run). How do they differ in their effects on CA?

Question