23. Donald Trump passed a tax cut in 2018. According to economic principles, this policy will lead to: A. decrease the value of the dollar if U.S. interest rates fall enough. B. increase the value of the dollar if U.S. interest rates rise enough. C. increase the value of the dollar if U.S. income and the U.S. price level increase enough. D. increase the value of the dollar in all cases.
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- 45. Suppose the Federal Reserve releases a policy statement today which leads people to believe that the Fed will be enacting contractionary monetary policy soon. Everything else held constant, the release of this statement would immediately cause the demand for U.S. financial assets to ______ and the U.S. dollar to _______. Select one: increase; appreciate decrease; appreciate increase; depreciate decrease; depreciate 44. If the government were to cut the personal income tax at the same time that it were to increase the corporate profits tax, the equilibrium price of bonds would ________, everything else held constant. Select one: decrease be ambiguous.Last week, 6 swedish kroner could purchase one U.S. dollar. This week, it takes 8 to purchase one U.S. dollar. this change U.S. aggregate demand. in the value of the dollar will exports from the U.S. sweden and 1. decrease; increase 2. increase; increase 3. increase; decrease 4. decrease; decreaseAssume that the government decreases its spending on discretionary budget programs. All else constant, how will the change in national income affect U.S. demand for imported goods and thus the value of the dollar? Demand for imports will be unchanged; the dollar will appreciate. Demand for imports will decrease; the dollar will depreciate. Demand for imports will decrease; the dollar will appreciate. Demand for imports will increase; the dollar will depreciate. Demand for imports will increase; the dollar will appreciate.
- 1. When the banking industry in aggregate has a higher reserve ratio than the required reserve ratio, the: A. greater the money multiplier. B. more money will be created. C. smaller the money multiplier. D. greater the level of required reserves. 2. If I took cash from my mattress/sock drawer/or some other place and deposit $100 in my local bank, this can lead to a maximum expansion in bank deposits of $500. Using the simple money multiplier formula, the required reserve ratio must be: A. 20 percent. B. 25 percent. C. 40 percent. D. 50 percent. 3. If you personally knew in 2020 that interest rates would jump from 2% to nearly 7% in 2022, you would want to be holding: A. more money because bond pries will likely fall. B. less money because bond pries will likely rise. C. more money because bond pries will likely rise. D. more money because bond pries will stay the same due to fed policy. 4.In 2008 the Federal Reserve decreases the reserve requirement as part of the stimulus, it: A.…Can you think of any major disadvantages to dollarization? How would a central bank work in a country that has dollarized?(a) The interest rate in the UK is 8%. The inflation rate in the US is 3% and in the UK 5%. Use the Fisher effect to find the US interest rate. Answer 6% (b) The exchange rate of the British pound is 1.25. The price level in the US is 300. The real money demand in the UK is 3. Assume that the PPP holds. Find the nominal money supply in the UK. Answer: 720 (c) The US economy grows at a 2% interest rate. The US is growing its nominal money supply at 6% interest rate. In Europe, the inflation rate is 3%. Find the expected rate of appreciation of the euro. Answer:0.01
- 5) Money and foreign exchange markets in Sydney and New York are very efficient. The following information is available: Spot Exchange Rate One year interest Rate Expected inflation Sydney 0.67 $/A$ 2.83% unknown New York 0.67 $/A$ 3.6% 7.5% a. What do financial markets suggest for inflation in Australia next year? b. Estimate today's one-year forward exchange rate between the dollar and the Australian $.6. Prior to 2009, Zimbabwe experienced several years of declining real GDP. According to an article in the Wall Street Journal, “After Zimbabwe abandoned its currency in favor of the greenback, the economy grew at an annual rate of 6% in 2009 and 9% in 2010." Why would Zimbabwe abandon its own currency to begin using U.S. dollars ("greenbacks")? economy Why would using the U.S. dollar as its currency have enabled the of Zimbabwe to resume growing? What potential problems could using U.S. dollars rather than its own currency pose for the Zimbabwean government?need assistance with b and c (a) The interest rate in the UK is 8%. The inflation rate in the US is 3% and in the UK 5%. Use the Fisher effect to find the US interest rate. Answer 6% (b) The exchange rate of the British pound is 1.25. The price level in the US is 300. The real money demand in the UK is 3. Assume that the PPP holds. Find the nominal money supply in the UK. Answer: 720 (c) The US economy grows at a 2% interest rate. The US is growing its nominal money supply at 6% interest rate. In Europe, the inflation rate is 3%. Find the expected rate of appreciation of the euro. Answer:0.01
- 30. . If the Fed reduces the money supply to reduce inflation: the interest rate will increase, and the price of US exports will fall and the price of US imports will rise. the interest rate will increase, and the price of US exports will rise and the price of US imports will fall. the interest rate will increase, and the price of both US exports and US imports will rise. 4. the interest rate will increase, and the price of both US exports and US imports will fall.1. Using graphs for support, determine what happens to the value of the dollar in each case: Make sure to say what is decreasing or increasing as well. a) There is a decrease in domestic income. b) There is an increase in foreign interest rates. c) There is a decrease in foreign prices. d) There is an increase in domestic prices.What does a managed (or dirty) float mean? That the country's central bank fixes the value of its currency. That a country's currency is fixed to the price of gold. That a country's balance of payments is persistently in deficit. That a country's central bank buys and sells currencies in order to smooth out short-run fluctuations in its own currency. That a country's currency is fixed to the value of the U.S. dollar.