chapter 16 - problems

chapter 16 - problems - 16 Short-Run Macroeconomic Policy...

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16 Short-Run Macroeconomic Policy under Fixed Exchange Rates QUICK QUIZ 3. Potential benefits from international capital mobility include (a) the ability of capital to flow to its most productive location. (b) the ability of portfolio owners to diversify. (c) the ability of potential capital flight to discipline policy makers. (d) the ability of savers to seek the highest return on their saving. (e) all of the above. (f) (a) and (d). 4. With a fixed exchange rate and perfectly immobile capital, contractionary fiscal policy in the short run leads to (a) a rise in Q and a fall in i. (b) a fall in Q and a rise in i. (c) no change in Q and a fall in i. (d) no change in Q and a rise in i. (e) a rise in Q and no change in i. (f) a fall in Q and no change in i. 5. With a fixed exchange rate and perfectly immobile capital, contractionary monetary policy in the short run leads to (a) a rise in Q and a fall in i. (b) a fall in Q and a rise in i. (c) no change in Q and a fall in i. (d) no change in Q and a rise in i. (e) a rise in Q and no change in i. (f) no change in Q or i. 6. With a fixed exchange rate and perfectly immobile capital, a currency revaluation in the short run leads to (a) a rise in Q and a fall in i. (b) a fall in Q and an uncertain effect on i. (c) no change in Q and a fall in i. (d) no change in Q and a rise in i. (e) a rise in Q and no change in i. (f) no change in Q or i.
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leads to (a) a rise in Q and a fall in i. (b) a fall in Q and a rise in i. (c) no change in Q and a fall in i. (d) no change in Q and a rise in i. (e) a rise in Q and no change in i. (f) a fall in Q and no change in i. 8. With a fixed exchange rate and perfectly mobile capital, contractionary monetary policy in the short run leads to (a) a rise in Q and a fall in i. (b) a fall in Q and a rise in i. (c) no change in Q and a fall in i. (d) no change in Q or i. (e) a rise in Q and no change in i. (f) a fall in Q and no change in i. 9. With a fixed exchange rate and perfectly mobile capital, a permanent currency revaluation in the short run leads to (a) a rise in Q and a fall in i. (b) a fall in Q and a rise in i. (c) no change in Q and a fall in i. (d) no change in Q or. i. (e) a rise in Q and no change in i. (f) a fall in Q and no change in i. 10. Under a fixed exchange rate and perfectly mobile capital, an expected currency devaluation in the short run leads to (a) a rise in Q and a fall in i. (b) a fall in Q and a rise in i. (c) no change in Q and a fall in i. (d) no change in Q or i. (e) a rise in Q and no change in i. (f) a fall in Q and no change in i. ANSWERS TO QUICK QUIZ 3. e. 4. c.
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This note was uploaded on 10/21/2011 for the course ECON 300 taught by Professor Gang during the Spring '06 term at Rutgers.

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chapter 16 - problems - 16 Short-Run Macroeconomic Policy...

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