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

Current account is given by the equation:

If a country's nominal interest rate is zero, then

Explain how the AA schedule is derived.

In long-run equilibrium after a permanent money-supply increase there follows:

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.

How is the AA schedule derived?

Imagine that the economy is at a point on that is below both AA and DD, where both the output and asset markets are out of equilibrium. Which first action is TRUE?

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

If the economy starts in long-run equilibrium, a permanent fiscal expansion will cause

Which one of the following statements is the MOST accurate?

The J-curve illustrates which of the following?

Which two time periods did the U.S. begin to experience a sharp increase in Current Account deficits?

The current account balance is

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

In the short run, a permanent increase in the domestic money supply

A real depreciation of a nation's currency gives rise to the ________ effect and the ________ effect on the current account.

Explain what are the factors that shift the AA Schedule?

Describe what is a J Curve?

In the short-run, an increase in government purchases will cause

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