Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Macroeconomics Expert

Problem:

Consider world in that prices are sticky in the short-run and perfectly elastic in long-run. APPP might not hold in the short run but does hold in long-run. The world has two countries, the U.S. and Japan. Both countries are initially in the long-run equilibrium with fixed money supplies.

Required:

a. Assume at time T, real GDP in United States falls permanently. Sketch two diagrams with the money market diagram for the US on left and the expected return in $/ exchange rate ($/yen) diagram on the right. Label the short-run (impact) effect as point(s) B and long-run effects as point(s) C.

b. What is the immediate effect of shock in United States on the U.S. interest rate and exchange rate ($/yen)? Provide two reasons why the exchange rate alters the way it does.

c. How do prices, nominal interest rates, and the exchange rate evolve over time? Please employ a separate time series diagram for each variable.

d. Did the exchange rate ‘overshoot?’ If so, recognize the overshooting in your diagram.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M913988

Have any Question? 


Related Questions in Macroeconomics

Economic article analysisplease have west coast time

Economic Article Analysis Please have west coast time cailfornia time. Plagrism free, orignal work, and refs. APA format double space. This is Macroecomics class. Prepare a 1 - 2 page research paper about current macro-e ...

All of the major empirical implications of the malthusian

"All of the major empirical implications of the Malthusian model hold true for the world 5,000 BCE to 500 CE" Critically discuss. The question should be answered at least 300 words in essay format, it is about the econom ...

Suppose ralph and ed have the only store that sells toilet

Suppose Ralph and Ed have the only store that sells toilet bowls in northern Maine. Their nearest competitor is 211 miles away, and these two men have a reputation for producing high-quality toilet bowls. Graphically ill ...

In the united stats a three-pound can of coffee costs 5 if

In the United Stats, a three-pound can of coffee costs $5. If the exchange rate is 0.6 euros per dollar and three-pound can of coffee in Belgium costs t 4 euros. What is the real exchange rate? (please show work)

Write 3 paragraphs answering the following questions1 why

Write 3 paragraphs answering the following questions: 1. Why does a downshift of the consumption schedule typically involve an equal upshift of the saving schedule? What is the exception to this relationship?? Defend you ...

Monetarists disapprove of how the federal reserve conducts

Monetarists disapprove of how the Federal Reserve conducts monetary policy. What is it about the Fed's policy process that bothers them? Discuss their criticisms.

Medicarewhat type of health insurance is

Medicare: What type of health insurance is Medicare? How is it paid for and who is eligible for it?  Is it a state or federal program? Medicaid: What type of health insurance is Medicaid? How is it paid for and who is el ...

Question 1 explain why real gdp might be an unreliable

Question 1: Explain why real GDP might be an unreliable indicator of the standard of living. Question 2: Why does unemployment arise and what makes some unemployment unavoidable? Question 3: Consider the following statem ...

Suppose the government raises its revenue by a net tax of

Suppose the government raises its revenue by a net tax of 25% on income, t = 0.25, the marginal propensity to consume out of disposable income is 0.8, and the government has an outstanding public debt of 1,500. The auton ...

Econ assignsuppose that there are two products clothing and

Econ Assign Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil can produce 100,000 units of clothing per year and 50,000 cans of soda. The United States ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro