Exerci Eight- Solution椭圆面积公式
1: it is about Dornbusch Model.
Consider the effects of a 1 percent increa in the money supply, in Dornbusch’s version of the monetary model of exchange rate determination (i.e., with sticky goods prices).
1) In the short run, what would happen if foreign exchange traders quoted to their customers an exchange rate equal to the level of its new long-run equilibrium value?
2) What must actually happen to the exchange rate in the short run to clear the foreign exchange market? Why?
3) What happens to the exchange rate over the following months or years? Why?
4) What happens to the exchange rate in the long run? Why?
Suggested answer:
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1)
2)
3)
4)
2. answer: e)
3. (Option, you could try if you are interested) It is about the Monetary Policy in the Mundell-Fleming model.
pdtAssume that the money demand relationship, goods demand relationship, and balance of
payments are expresd by the following functional form.
nasty nasty
LM curve: = Y − λi
(Note: We have normalized the price level as P = 1 .)forgiven
IS curve:
BP curve:
1) For this part, assume that the exchange rate is fixed.
a. Solve the LM and IS equations simultaneously.
b. Express income Y as a function of, and.
c. What is the “money multiplier,” i.e., the change in real income ∆ Y that results from a given change in the real money supply ∆? Is it greater or less than 1?
(We are holding constant in this experiment. Also becau the exchange rate is
still fixed, for now.) add什么意思
2) Now assume the exchange rate floats, and so the balance of payments must clear.雅思在线课程收费
a. U the BP equation to express i as a function of the other variables.
hrbb. In the limiting ca of perfect capital mobility ( κ → ∞ ), how is i determined?
c. U the LM curve and your answer to (b) to express Y as a function of the real money
supply,.
d. Now for this ca of floating exchange rates, what is the “money multiplier,” i.e., the
change in real income ∆ Y that results from a given change in the real money supply ∆中考时间2020年? Is it larger or smaller than the effect in 1)c? Why?
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