Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

A central bank that adopts a fixed exchange rate system may sacrifice its monetary autonomy in setting its domestic monetary policy. It is sometimes argued that when this is the case, the central bank also gives up the ability to use monetary policy to combat the wage price spiral. The argument goes like this: Suppose the workers demand higher wages and employers give in, but that the employers then raise output prices to cover their higher costs. Now the price level is higher and the real balances are momentarily lower, so to prevent an interest rate rise that would appreciate the currency, the central bank must buy foreign exchange and expand the money supply. This action accommodates the initial wage demands with money growth and the economy moves permanently to a higher level of wages and prices. With a fixed exchange rate there is thus no way on keeping wages and prices down". What is wrong with this argument?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M938148

Have any Question? 


Related Questions in Microeconomics

Economic term paperempirical project the research project

Economic Term Paper Empirical Project The research project should be about 10 pages and should explain your data collection, model, and findings. The project (due by the final exam date) is worth 30% of your final grade. ...

Project-listen to this video asafter you work on your graph

Project- Listen to this video as/after you work on your graph. The lecture is on the 'Aftermath of the Financial Crisis' given by Ben Bernanke in March 29 th 2012. https://www.c-span.org/video/?305198-1/ben-bernanke-lect ...

Feeding america final milestonein this assignment you will

Feeding America Final milestone In this assignment, you will demonstrate your mastery of the following course outcomes: - Evaluate management strategies and organizational structures of not-for-profit organizations for t ...

Milestone projectmilestone one propose organization for

Milestone Project Milestone One: Propose Organization for Analysis In Module Three, you will select the organization you would like to analyze in part two of the final project using the U.S. Securities and Exchange Commi ...

Economics assignment1 multiple product pricinganswer the

Economics Assignment 1. Multiple Product Pricing: Answer the following about the pricing of multiple products: a. Icarus Medical Supplies produces adhesives that are used to reassemble broken bones. Pindrop Medical Produ ...

1 the crr model european claimconsider the crr model of

1. The CRR model: European claim. Consider the CRR model of stock price S with T periods and parameters d (a) Consider the European claim X with expiry date T and the payoff X = g(S r ) = 1/S T 1[k,∞)(S T ). Show that th ...

Discussion questionconsider a group of documents that has

Discussion Question Consider a group of documents that has been selected from a much larger set of diverse documents so that the selected documents are as dissimilar from one another as possible. If we consider documents ...

Assignmentyou are the director of safety and health at

Assignment You are the Director of Safety and Health at Rotorcraft America, a mid-sized company that designs, manufactures and sells helicopters. Your organization has manufacturing operations in San Francisco, Californi ...

Question 1 the agrizone corporation invests 140140 million

Question 1. The Agrizone Corporation invests $14.014.0 million in a new inventory tracking system. A. The opportunity cost of Agrizone's decision is the value of leaving the money unutilized. B. The opportunity cost of A ...

Assignmentioverview provide an overview consisting of a

Assignment I. Overview: Provide an overview consisting of a brief description of the chosen company, your chosen product or service, and annual sales. II. Macroeconomic Variables For this section, you will utilize macroe ...

  • 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

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

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen