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?
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
Draw IS-LM graphs to show the effectiveness of both monetary and
fiscal policies under the following circumstances. Explain your
answers.
A. Keynesian depression.
B. Classical full employment.
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
“Policymakers are in favor of using the flexible exchange rate
system compare with the fixed exchange rate system to attain both
the internal balance and external balance of the economy.”
Explain.
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...
Under flexible exchange rates, an expansionary monetary policy
leads to a decrease in the interest rate, and thus a depreciation
of the exchange rate.’ Explain and critically evaluate this
statement using IS-LM-IP and IS-MP-IP models.