You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the following questions. Provide a graphical explanation for your answers whenever possible. What is the effect on the foreign exchange market (the $ market)? 12. What impact will this have on imports? A. increase B. decrease C. remains unchanged 13. What impact does the change in the exchange rate have on aggregate demand? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged 14. What happens to the aggregate supply curve? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged

You have been hired as a Marco Economist by the President of the United States to help evaluate the recent announcement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again. Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer the following questions. Provide a graphical explanation for your answers whenever possible. What is the effect on the foreign exchange market (the $ market)? 12. What impact will this have on imports? A. increase B. decrease C. remains unchanged 13. What impact does the change in the exchange rate have on aggregate demand? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged 14. What happens to the aggregate supply curve? A. increase (shifts to the right) B. decrease (shifts to the left) C. remains unchanged

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter13: Monetary Policy

Section: Chapter Questions

Problem 10E

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You have been hired as a Marco Economist by the President of the United States to help evaluate the recentannouncement by Federal Reserve chairman Ben Bernanke that the FED will be increasing interest rates again.Ben Bernanke has justified the move on the grounds that the economy continues to be strong. Answer thefollowing questions. Provide a graphical explanation for your answers whenever possible What is the effect on the foreign exchangemarket (the $ market)? 8. The exchange rate (the amount of foreigncurrency that a $ buys)?A. increaseB. decreaseC. remains unchanged 9. The U.S. dollar has?A. depreciatedB. appreciatedC. remained unchanged 10. The currency in the other country has?A. depreciatedB. appreciatedC. remained unchanged
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