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...
3) explain the effect of expansionary domestic monetary policy
in a country with fixed exchange rates. explain the linkages as the
money moves through the economy and has its effects on the capital
and current accounts as well as on domestic spending. Is the
monetary policy enhanced or made weaker by the fixed exchange rate?
explain
4) explain the effect of expansionary domestic fiscal policy in
a country with fixed exchange rates. explain the linkages as the
changes move through...
Under fixed exchange rates, excessive monetary growth
leads to balance of payments problems.
Under floating exchange rates, it leads to a currency
problem.
Discuss these statements with
reference to the monetary approach to the balance of
payments.
An important difference between fixed and floating exchange
rates is the impact on monetary policy. This difference is framed
by some economists as being a benefit of floating exchange rates,
but other economists frame the same thing as a benefit of fixed
exchange rates. Explain each side of the argument, and then give
your own opinion.
An important difference between fixed and floating exchange
rates is the impact on monetary policy. This difference is framed
by some economists as being a benefit of floating exchange rates,
but other economists frame the same thing as a benefit of fixed
exchange rates. Explain each side of the argument, and then give
your own opinion.
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.
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
It's a weak economy. The Fed implements stimulative monetary
policy to lower rates, expecting firms will increase borrowings.
Banks are willing to lend. Why might the Fed's expectation that
firms will borrow be wrong? What happens if they're wrong?
What are the markets expectations for future rates?
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.