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Macroeconomics Analysis Chapter 5 Questions

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Subject: Economics
Due on: 04/15/2015
Posted On: 04/14/2015 02:18 AM

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1. Show the effect of dollar appreciation and depreciation with the euro on the price of U.S. exports and imports by updating Table 15.2, as shown in the updated table.


TQ 3. If the U.S. economy is operating near full employment and the exchange rate increases (the dollar appreciates), explains why the Federal Reserve will be less inclined to raise interest rates


AQ 3. Based on the discussion in this chapter, update the controversy over the value of the Chinese yuan in foreign currency markets. Is China still using central bank foreign exchange policy to maintain the value of the yuan? What is the current policy of the United States on this issue?


Q4. The U.S. has historically low interest rates at present. How would you predict these would impact the value of the dollar on foreign exchange markets? How, in turn, would these low interest rates impact our balance of trade? Explain your answers.


Q5. Why would nations favor fixed vs. floating exchange rates for their currencies? Why do some developing nations have a “fear of the float?"


Q7. Identify the three most significant economic problems we currently confront. Also, identify the role monetary policy could play (if any) in resolving these problems.

Tags questions chapter analysis macroeconomics exchange rates policy value dollar foreign yuan impact problems identify nations markets table explain trade answers balance euro favor turn states united historically present price predict fixed floating confront currently

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Macroeconomics Analysis Chapter 5 Questions Answers

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Posted On: 04/14/2015 02:23 AM
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Macroeconomics_Analysis_Chapter_5_Questions_Answers.docx (26.01 KB)
Preview: Mexico xxxxxx their xxxxxxxx to the xx Dollar However xxxx is xxx x fail-safe xxxxxxx and as xxxxxxxxx by history xx these xxx xxxxxxxx one xxx see the xxxxxxx associated with xxx having xx xxxxxxxxxxx monetary xxxxxx To maintain xxxxx exchange rates, xxxxxxxxx have xx xxxxxxxx huge xxxxxxx exchange reserves xxxxxxx large foreign xxxxxxxx reserves xxx xx implicit xxxx in terms xx diverting savings xxxxx could xxxx xxxxxxxxx been xxxx for more xxxxxxxxxx purposes Also, xxxx fixed xxxxxxxx xxxxxx the xxxxxxxxxxx of a xxx on the xxxxxxxx always xxxxxxxx xxxxxxxxxx countries xxxx floating exchange xxxxx since the xxxxxxxx rate xx xxxxxxx to xx determined by xxx demand and xxxxxx of xxxxxxxx xxxxxxxx vis x vis other xxxxxxxxxx There can xx large xxxxxxxxxxxx xx the xxxxxxxx rate as xxx money flows xx and xxx xx the xxxxxxx This in xxxx destabilize the xxxxxx rate xxx xxxx lead xx run on xxx currency Hence xxx choice xxxxxxx xxxxx and xxxxxxxx exchange varies xxxxxxx nations depending xx how xxxx xxxxx they xxxxx on having xx independent monetary xxxxxx and xxxxx xxxxxxx to xxxx foreign exchange xxxxxxxx Q7 Identify xxx three xxxx xxxxxxxxxxx economic xxxxxxxx we currently xxxxxxxx Also, identify xxx role xxxxxxxx xxxxxx could xxxx (if any) xx resolving these xxxxxxxx HYPERLINK xxxxxxxxxxxxxxxx xxxxxxxxxx org/"http://research xxxxxxxxxx org/ The xxxxx most significant xxxxxxxx problems xxxxxx xxx inflation xxxxxxx Lack of xxxxxx of economy xxx employment xxxxxxxxxxxxxxx xxx price xx oil and xxxxx of asset xxxxxxx due xx xxx interest xxxxxxxx undertook quantitative xxxxxx to stimulate xxx economy xxxxxxx xxxxxxx increasing xxx inflationary expectations, xx will be xxxx to xxxxxxxxxxx xxxxx to xxxxxxxxx new investments xxxxxxxxxxxx expectations induce xxxxxxxxx to xxxx xxx current xxxxxxxxxxx and postpone xx instead into xxx future xxxx xx turn xxxx induce firms xx cut down xx production xxx xxxxxxxxxx Though xxx Fed has xxxxxxxxx the money xxxxxx with xxx xxxxxxxxxxxx easing xxxxxxxx lending has xxx picked up xxx However xxxxxxxxxxxx xxxxx have xxxx down while xxxxxx rates have xxxxxx up xxxxxxxxx xxxxx haven’t xxxxxx and there xxxxxx deflationary expectations xxxx could xxxx xx a xxxxxxxx economy akin xx what occurred xx Japan xx xxx 1990’s xxxxxxxxx.....
Macroeconomics_Analysis_Chapter_5_Questions_Answers1.xlsx (15.44 KB)
Preview: to x lesser xxxxxx The Chinese xxxxxxxxxx has now xxxxxxxxxx a xxxxxx xxxxxxx moving xxxx from export-led xxxxxx They have xxxxxxx their xxxxxx xxxxxxxx on xxxxxxxxxxxxx their economy, xxxx initiatives directed xx reducing xxxxxxxx xxx corruption xxxxxxx the Chinese xxxxx hold a xxxxx reserve xx xx Dollar xx far as xxx US is xxxxxxxxxx the xxx xxx effectively xxxx its quantitative xxxxxx program to xxxx start xxx xxxxxxx along xxxx fiscal policy xxxxxxxx The Fed xxxxxxxxx the xxxxxxxxxxxx xxxxxx program xx buying back xxxxx and holding xxxxxxxx rates xxxx xx zero xxxx last year xxxxxx Now the xxx has xxxxxxx xxx quantitative xxxxxx and is xxxxxxxx to raise xxxxxxxx rates xxxxx xxxx financial xxxx In summary, xxx Fed reduced xxx interest xxxxx xxxxxxx the xxxx of outflow xx dollars However, xx has xxxxxxxxx xxxx the xxxxxx of the xxxxxx -it being xxx reserve xxxxxxxx xx well xx the low xxxx perceptions associated xxxx the xxxxxxx xx the xxxxxx has not xxxxxxxxx depreciated while xxx unemployment xxxx xxx consistently xxxx down over xxxx Q4 The x S xxx xxxxxxxxxxxx low xxxxxxxx rates at xxxxxxx How would xxx predict xxxxx xxxxx impact xxx value of xxx dollar on xxxxxxx exchange xxxxxxxx xxxx in xxxxx would these xxx interest rates xxxxxx our xxxxxxx xx trade? xxxxxxx your answers xxxxxxxxx to economic xxxxxxx as xxx xx Fed xxxxx the interest xxxxx at historical xxxx – xx xxxx zero xxxxx – one xxxxx expect large xxxxxxx of xxxxxxx xxxxxxxx That xxx individuals (both xx citizens as xxxx as xxxxxxxxx xxxx rest xx the world) xxxx be expected xx withdraw xxxxx xxxxxxxxxxx in xx assets and xxxxxxxxxx their investments xx assets xx xxxx of xxx world As x result, we xxxxx expect xxx xx dollar xx depreciate in xxxxx Low interest xxxxxx in xxxxxxxx xxxx to xxxxxxxxxx the currency xx investments are xxxxx away xxxx xxxxxxxx assets xxxx in turn xxxxx to shift xx the xxxxxxx xx trade, xxxx exports becoming xxxxxxx while imports xxx more xxxxxxxxx xxxxxxxx in xxxx of US, xx events evolved xxxx time, xxx xx Dollar xxx not depreciated xx the extent xxx would xxxxxx xxxxx on xxxxxxxx theory One xxxx needs to xxxxxxxx two xxxxx xxxxxxx - xxx US Dollar xx the reserve xxxxxxxx and xxx xx assets xxx considered to xx the safest xxx part xxx xx US xxxxxx being the xxxxxxx currency) Due xx these xxx xxxxxxxx US xxxxxx need not xxxxxxxxxx as Fed xxxxx interest xxxxx xxxxx to xxxx Recently, we xxxx seen that xx Dollar xxx xxxx appreciating xxxxxxx other currencies, xxxxx is in xxxxxxxx to xxxx xx suggested xx economic theory xxxxxxxx this needs xx be xxxxxx xx line xxxx the developments xx rest of xxx world xxx xx economy xx one of xxx few economies xxxx is xxxxxxx xxxxxx recovery xxxxx other nations xxx economic unions.....
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