Question 7 (5 points) In an open economy, a permanent beneficial supply shock (s< 0) implies that the domestic real exch

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Question 7 5 Points In An Open Economy A Permanent Beneficial Supply Shock S 0 Implies That The Domestic Real Exch 1 (63.53 KiB) Viewed 30 times

Question 7 (5 points) In an open economy, a permanent beneficial supply shock (s< 0) implies that the domestic real exchange rate will: appreciate as the rest of the world buys the domestic currency remain unchanged because of offsetting movements in the domestic price level remain unchanged because of offsetting movements in real interest rates depreciate so as to crowd-in net exports Question 8 (5 points) Comparing the effect of shocks on output under flexible and fixed exchange rates: demand shocks are more muted under fixed rates supply shocks have a smaller effect under flexible rates demand shocks are more muted under flexible rates supply shocks have a larger effect under fixed rates Question 9 (5 points) Comparing speeds of adjustment between fixed and flexible exchange rate systems: both systems adjust at the same speed the flexible exchange rate system adjusts faster O it cannot be theoretically determined which system adjusts the faster the fixed exchange rate system adjusts faster