Describe the effects of contractionary monetary policy by the domestic central bank on output, the real interest rate, and net exports in both the domestic and foreign country, using a Keynesian model in the short run. What happens in the long run? Show a diagram to illustrate the short- and long-run effects in both countries.
What will be an ideal response?
Domestic country: output falls, real interest rate rises, and net exports rise
Foreign country: output falls, real interest rate falls, and net exports fall.
There are no real effects in the long run.
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Prices of microbrewery beer (assume that this is a normal good) have risen steadily in recent years. Over this same period, prices for fermenting vats used in beer making have also risen and consumer incomes have fallen
Which of the following best explains the rising prices of microbrewery beer? A) The supply curve for microbrewery beer has shifted to the left while the demand curve for microbrewery beer has shifted to the right. B) The supply curve for microbrewery beer has shifted to the left more than the demand curve has shifted to the left. C) The demand curve for microbrewery beer has shifted to the left more than the supply curve has shifted to the left. D) The demand curve and the supply curve for microbrewery beer have both shifted to the right.
The downward-sloping portion of the marginal cost curve is the only portion that matters in production
Indicate whether the statement is true or false
At an output level above the profit-maximizing level, for a perfectly competitive firm, a reduction in output will:
a. reduce total revenue more than total cost. b. reduce total cost more than total revenue. c. increase total revenue more than total cost. d. increase total cost more than total revenue. e. decrease total revenue and total cost by the same amount.
A diagram of an individual's utility from income will be a line with a constant slope if the individual is risk-neutral.
Answer the following statement true (T) or false (F)