1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
RUDIKE [14]
3 years ago
7

Suppose the U.S. economy slips into a recession. In response, the Federal Reserve cuts the federal funds rate in order to avoid

unemployment. Consider what happens to the following under a fixed exchange-rate regime.
a. Domestic investment would increase
b. Capital inflow would decrease
c. Capital outflow would increase
d. The exchange rate would be unchanged
e. Net exports would be unchanged
f. Aggregate demand would increase
Business
1 answer:
Verizon [17]3 years ago
3 0

Answer: All Variables will remain unchanged

Explanation:

Monetary Policy has no effect on a country's domestic currency because it is simply ineffective when it is in a fixed exchange rate regime. This is because, when monetary policy is used, it tends to change the exchange rate but because the Fed will be engaging in a fixed exchange regime, it will act to normalise the exchange rate which will bring the currency back to equilibrium.

For instance, if the Fed embarks on expansionary monetary policy and pegs its currency to the Euro. The expansionary policy will lead to a drop in interest rates which is supposed to help GDP. However as a result of lower rates, the dollar will depreciate and more people will demand Euros. The Fed will intervene to keep the Euro and the Dollar at the same level (fixed exchange) and sell Euros in its reserves while reducing dollars. This will bring the interest rate and currencies back to its original level so there will be no benefit.

Monetary policy is ineffective under a Fixed Rate regime so one of the variables will change.

You might be interested in
When demand is unit elastic, price elasticity of demand equals a. 1, and total revenue and price move in the same direction. b.
yawa3891 [41]

Answer:

a. 1, and total revenue and price move in the same direction

Explanation:

Unit elasticity of demand is when a change in price leads to a proportional change in quantity demanded.

A good has a unit elastic demand when its coefficient of elasticity is equal to one.

If price increases by 20% , quantity demanded falls by 20%.

If price falls by 20%, quantity demanded increases by 20%.

I hope my answer helps you.

4 0
3 years ago
The price of ice cream increases. In 1 or 2 sentences, explain how and why this affects the quantity of ice cream cones demanded
Ivan
As the price of ice cream increases, so the demand by consumers may decrease, decreasing the quantity of ice cream cones demanded (provided that all consumers eat ice cream with a cone!)
4 0
3 years ago
Read 2 more answers
When the price level decreases: Group of answer choices The demand for money falls and the interest rate falls Holders of financ
rodikova [14]

Answer:

The answer is A. demand for money falls and the interest rate falls

Explanation:

The demand for money is the amount of money or amount of wealth households or businesses choose to hold in the form of money(cash or cash-equivalent).

When the price level decreases, the purchasing power of consumers increases, so consumers' demand for money will be reduced or lower. The transactional demand for money will be reduced.

Also when price level decreases, interest rate falls. Because the purchasing power of consumers has been increased, the excess money will be kept in banks and the increases the money supply. So with an increase in money supply, interest rate will be reduced to encourage borrowing.

3 0
3 years ago
Read 2 more answers
A​ monopolist's maximized rate of economic profits is ​$2 comma 700 per week. Its weekly output is 900 ​units, and at this outpu
LuckyWell [14K]

Answer:

Average total cost= $46

Marginal revenue= $33

Explanation:

In this instance the monopolist's total cost is the revenue from sale of one unit less the economic profits per unit

Economic profit per unit= 2,700/900

Economic profit per unit= $3

Average total cost= (Price per unit) - (Economic profit per unit)

Average total cost= 49 - 3= $46

For this instance marginal revenue is equal to marginal cost.

Marginal revenue= Marginal cost= $39

3 0
3 years ago
You want to go to Europe 5 years from now, and you can save $7,300 per year, beginning one year from today. You plan to deposit
tino4ka555 [31]

Answer:

$36,602.5

Explanation:

Your profit each year of saving $7,300 at 8.5% return each year is $620.5

In that case you earn $7,920.5 each. Multiply by 5 years which is the fifth year you made the last deposit, and you will arrive at $36,602.5

6 0
3 years ago
Read 2 more answers
Other questions:
  • Roland is facing a criminal trial after being arrested for committing manslaughter. At a certain stage in the pretrial process ,
    9·1 answer
  • The following information is available for Oriole Company
    15·1 answer
  • Michael's, Inc. just paid $2.75 to its shareholders as the annual dividend. Simultaneously, the company announced that future di
    15·1 answer
  • Irene plans to retire on January 1, 2020. She has been preparing to retire by making annual deposits, starting on January 1, 198
    13·1 answer
  • Tommy McCartney is a sixteen-year-old high school student. He has worked forty hours per week at the local convenience store ove
    11·1 answer
  • The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company’s fisc
    9·1 answer
  • What are the three legal forms of business organization? What are the advantages and disadvantages of each one
    6·1 answer
  • How much would Israel’s nominal GDP growth be next year if it experienced real GDP growth next year the same as its average over
    12·1 answer
  • As the supply of Blu-Ray players has increased over the years and the price of Blu-Ray players has dropped, the _____.
    7·1 answer
  • which one of the following is the primary determinant of a firm's cost of capital? a. cost of debt b. d/e ratio c. tax rate d. u
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!