Explain how and why economic events in the United States affected the economies of Thailand, South Korea, and Indonesia and vice-versa.
What will be an ideal response?
Thailand, South Korea, and Indonesia fixed the values of their currencies to the U.S. dollar. When the value of the dollar increased from 1995 to 1997, their currencies also appreciated relative to most other currencies. That made their exports more expensive to many of their trading partners and led to trade deficits. When the economic downturn occurred in 2000, all four of these countries saw the value of their currencies decline. These depreciations restored their international competitiveness but they also reduced their citizens’ purchasing power. The rise in the value of the dollar in the United States and the recession that began in the United States in 2007 had an impact on the economies of these Asian countries. On the other hand, the 2001 Asian had an impact on the U.S. economy.
You might also like to view...
An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
Suppose Congress increased spending by $100 billion and raised taxes by $100 billion to keep the budget balanced. What will happen to real equilibrium GDP?
A) Real equilibrium GDP will fall. B) Real equilibrium GDP will rise. C) Real equilibrium GDP will initially rise, but then fall below its previous equilibrium value. D) There will be no change in real equilibrium GDP.
If stock prices go up and people feel richer, aggregate demand will
What will be an ideal response?
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher