Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 13, Problem 1PA
(a)
To determine
The impact of a fall in the confidence about the future leading to saving more and spending less today.
(b)
To determine
The impact of a new cars makes preference for foreign cars over domestic cars.
(c)
To determine
The impact of introduction of new ATMs.
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The diagram to the right most likely shows the impact on the Canadian economy of
A. an increase in the worldwide demand for petroleum products, a major Canadian export good.
B. changes in world tastes in favour of Canadian goods.
C. a decrease in foreign incomes.
D. an outbreak of inflation outside of Canada.
If the Bank of Canada makes no transactions in the foreign-exchange market, the Canadian dollar will undergo
a depreciation.
Use the three-point curve drawing tool to show how a flexible exchange rate serves as a "shock absorber" to the external
shock depicted in the accompanying graph.
Carefully follow the instructions above, and only draw the required objects.
………….
Price Level (P)
FO
Real GDP (Y)
ASO
AD1
ADO
Q
Suppose that the central bank decreases the tax rate. What happens to the output (Y), real interest rate (r), exchange rate (e), investment (I), and net export (NX) under the following model environment? (Note: (1) The exchange rate e is the amount of foreign currency per unit of domestic currency. (2) Explain your answers using the graph/figure.)
Short-run closed economy.
Short-run small-open economy (Floating exchange rate).
Short-run small-open economy (Fixed exchange rate).
Short-run large-open economy (Floating exchange rate).
Long-run closed economy.
Does an expectation of a stronger exchange rate in the future affect the exchange rate in the present? If so, how?
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