You have been appointed policy advisor of the country Economia. The country is an open economy, has a floating exchange
Posted: Wed Mar 09, 2022 8:40 am
You have been appointed policy advisor of the country Economia.
The country is an open economy, has a floating exchange rate regime
and uses the Econ as its currency. The government is trying to
understand the effect of the following shocks on the exchange rate
(πΈπΈπππ/πΉ), the home and foreign price level and real money
balances.
Use the fundamental equation of the monetary approach to advise
the government on the effect of each of these shocks.
a. A decrease in foreign money supply
b. An increase in home real income
c. A decrease in the home nominal interest rate
d. A decrease in the foreign nominal interest rate
The country is an open economy, has a floating exchange rate regime
and uses the Econ as its currency. The government is trying to
understand the effect of the following shocks on the exchange rate
(πΈπΈπππ/πΉ), the home and foreign price level and real money
balances.
Use the fundamental equation of the monetary approach to advise
the government on the effect of each of these shocks.
a. A decrease in foreign money supply
b. An increase in home real income
c. A decrease in the home nominal interest rate
d. A decrease in the foreign nominal interest rate