Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Macroeconomics Expert

Question 1: The International Monetary System: Exchange Rate Regimes

A currency exchange rates for December 1999-September 2013; (b) US and Country A monthly foreign exchange reserves December 1999-August 2013 and (c) Country A interest rates for January 2005-September 2013.

(i) Apply the Reinhart (2000) methodology to the exchange rate and reserves data to identify Country A's exchange rate regime (1 page, 20 points).

(ii) Utilize your above conclusion and the exchange rate, reserves and interest rate data to discuss the pressures on Country A's exchange rate during the height of the recent financial crisis (2007-2008) and post-crisis (1 page, 20 points).

Question 2: Monetary Unions

Country B is a member of a monetary union with several other countries. During this 10 year period, the union central bank largely opted for monetary policy restraint and price stability in accordance with average economic developments in the monetary union.

1. In the absence of monetary policy and the exchange rate as stabilization instruments and given the monetary policy stance of the monetary union, briefly discuss the feasibility of using fiscal policy to stimulate the economy. Inform your discussion with a debt sustainability framework analysis in order to assess the "sustainable fiscal deficit." Use the debt sustainability framework we discussed with regard to EMU convergence requirements and assume that a sustainable public debt/GDP ratio for Country B is the ratio achieved in year 10. Make sure to include a table with your debt sustainability calculations.

2. Discuss, illustrating with the appropriate AS/AD diagrams, why relinquishing monetary policy and exchange rate policy as stabilization instruments may prove costly for Country B. Assume that Country B lacks sufficient wage flexibility, labor mobility and integrated financial markets to adjust to shocks.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9132505
  • Price:- $20

Priced at Now at $20, Verified Solution

Have any Question?


Related Questions in Macroeconomics

Question explain why the market fails to provide optimal

Question: Explain why the market fails to provide optimal quantities of: i) Positive & negative externalities ii) Public Goods iii) Common Property Resources The response must be typed, single spaced, must be in times ne ...

Question why might a parent company like mcdonalds or

Question: Why might a parent company like McDonalds or Hilton choose to franchise its local outlets rather than own them and staff them with employees? In many smaller cities all McDonald's outlets are owned by the same ...

Question go to the internet and find a news article

Question: Go to the internet and find a news article published within the last three months that discusses macroeconomic effects of exchange rates, summarize key points and post in the Discussions area. Reflection - the ...

Question - suppose the demand curve for a product is given

Question - Suppose the demand curve for a product is given by Q = 19 - 1P + 2Ps Where P is the price of the product and Ps is the price of a substitute good. The price of the substitute good is $2.40. Suppose P = 0.60. W ...

Question -you have a full-time job but you decide to go to

Question - You have a full-time job but you decide to go to a college and be a full-time student. What is your total economic cost to be a full-time student? Provide and discuss two items of explicit cost and two items o ...

Question - how does strategic positioning benefit a firm

Question - How does strategic positioning benefit a firm? Discuss the importance of advertising, branding, and the effect of both on the product's demand curve.

Question draw a long run average cost and marginal cost

Question: Draw a long run average cost and marginal cost curve for a business and explain why they have this shape. - Also on the graph show a P1 that is very profitable for this firm and the Q1 associated with this P1. ...

Question suppose the price level in a particular economy

Question: Suppose the price level in a particular economy equals 1.3 and that the quantity of real GDP demanded at that price level is $1,200. An increase of 0.1 point in the price level reduces the quantity of real GDP ...

Question a monopolist faces the following informationthe

Question: A monopolist faces the following information: The market demand: Q=300-2P The cost Structure: TC=100+50Q a) what is the profit-maximizing price-output combination and what are the levels of profits and consumer ...

Principles of macroeconomics assessment - supply and demand

PRINCIPLES OF MACROECONOMICS ASSESSMENT - Supply and Demand, and Equilibrium Analysis Assume: Demand Curve: Q D = 80 - 10P; and Supply Curve: Q S = 10P 1. Using the above information, complete the schedules for Quantity ...

  • 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

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As