PS9 - Econ 3140-2 Fall 2009 Problem Set 9 Due Wednesday...

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Econ 3140-2 Fall 2009 Problem Set 9 Due Wednesday November 18 (on lecture time) Reading assignment: Chapter 13 1. Suppose the real exchange rate is 10 , the domestic price level is 8 , and the foreign price level is 4 . (a) What is the nominal exchange rate? (b) Suppose the real exchange rate rises by 10% country is 6% 4% . By what percentage does the nominal exchange rate change? (c) Suppose the nominal exchange rate rises by 5%, the real exchange rate rises by 2. What happens to the exchange rate and net exports in each of the following cases? (a) The foreign real interest rate falls. (b) Foreign output rises. (c) Foreign demand for domestic goods rises. (d) Domestic output rises. (e) The domestic real interest rate falls. 3. Question Five from Abel et.al., Chapter 13, numerical problems. 4. (a) Describe the e/ects of contractionary ±scal policy by the domestic government on
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This note was uploaded on 03/10/2010 for the course ECON 3140 taught by Professor Mbiekop during the Spring '07 term at Cornell University (Engineering School).

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