Explain what effect each of the following events will have on the IS curve in a flexible exchange rate regime: (1 ) an increase in foreign output; (2 ) a reduction in the foreign interest rate; and (3 ) an increase in the domestic interest rate
What will be an ideal response?
An increase in Y* causes X to rise, Z to rise, and the IS curve to shift to the right. A reduction in i* will cause an appreciation of the domestic currency, a reduction in NX, and a leftward shift in the IS curve. A change in i will only cause a movement along the IS curve.
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A graph shows the price of a pound of cucumbers on the vertical axis and the quantity of new cars sold by GM on the horizontal axis. The price of a pound of cucumbers remains constant as the quantity of new cars sold increases
The graph of these data is A) a horizontal line. B) a vertical line. C) a curve with a maximum. D) a positively-sloped line.
A demand curve generally
a. is a straight horizontal line. b. is a straight vertical line. c. slopes downward to the right. d. slopes downward to the left.
Other things equal, which of the following will lead to an increase in output and employment?
A) The federal government decides to eliminate the Department of Education. B) The federal government implements a national value-added tax (VAT). C) The federal government passes a tax incentive for firms that employ returning war veterans. D) The federal government reduces the duration and amount of unemployment benefits.
The federal government's abilities to tax during war- and peace-times are constrained by
(a) the need to be re-elected by the voting population. (b) the interests of the non-voting population. (c) the U.S. Constitution. (d) the protected rights of state and local governments to tax.