Exam 17: Output and the Exchange Rate in the Short Run

The real exchange rate is:

One implication of an empirical investigation of the Marshall-Lerner condition is that,in the ________,a real ________ in a nation's currency is likely to ________ the country's current account balance.

Explain how an increase in government spending would affect the DD-AA schedule in the short run.

In the short run,any rise in the real exchange rate,EP /P,will cause

In the short run

Using a figure show that under full employment,a temporary fiscal expansion would increase output (over-employment)but cannot increase output in the long run.

What would be the best description of what we assume about money prices in the short run?

The Marshall-Lerner condition holds that a country's current account balance will ________ in response to a real ________ in a nation's currency if the________.

The Marshall-Lerner Condition states that,all else equal

Which one of the following statements is MOST accurate?

Assume the asset market is always in equilibrium.Therefore a fall in Y would result in

Fill in the following table.

If consumers experience an increase in lifetime income,current spending will ________,current saving will ________,and future spending will ________.

Which of the following have to be in equilibrium for the economy to be in equilibrium?

The current account balance is

What is an accurate implication resulting from an increase in income?

A country's domestic currency's real exchange rate,q,is defined as

Which of the following equations does NOT state a condition required for equilibrium output:?

Explain the following figure:

Give 4 examples of situations that would cause the DD-curve to shift to the left.