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

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

Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 150 euros and the representative U.S. basket costs $200, and the dollar/euro exchange rate is $1.20 per euro, then the price of the European basket in terms of U.S. basket is:

Show the effects of a permanent increase in the money supply.

According to historical data, what is the effect of a sharp change in the current account on the exchange rate (both in the short and long run)?

In the short run

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

Which of the following is an example of an "unconventional monetary policy" by a central bank?

A country's domestic currency's real exchange rate, q, is best described by

The domestic currency price of a representative foreign expenditure basket is

Which one of the following statements is the MOST accurate?

Monetary expansion causes the current account balance to increase in the short run. Discuss. Is the same the case for fiscal expansion?

When an economy is in a liquidity trap

Which one of the following statements is MOST accurate?

Why is the economy at full employment in the long run?

In practice, many U.S. import prices tend to rise by only around

A permanent increase in the domestic money supply