Quick%20Quiz%2010%21 - will increase NX in Europe Solution...

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© Hadi Salehi Esfahani Current economic trends in the US may raise the price level here temporarily. Taking all policies here and elsewhere as given, how would the US price increase affect: 1. The IS curve in Europe? 2. The LM curve in Europe? 3. Europe's nominal interest rate and aggregate real income (please use the IS-LM diagram)? 4. The nominal exchange rate (dollars per euro)? Quick Quiz 10!
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© Hadi Salehi Esfahani Income, Y i IS 0 i 0 Y 0 LM Y 1 i 1 IS 1 An increase in US price level
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Unformatted text preview: will increase NX in Europe Solution to Quick Quiz 10: © Hadi Salehi Esfahani • How would the US price increase affect: 1. The IS curve in Europe?-Shifts to the right 2. The LM curve in Europe?-No shift 3. Europe's nominal interest rate and aggregate real income (please use the IS-LM diagram)?-Both go up. 4. The nominal exchange rate (dollars per euro)?-Also goes up! Solution to Quick Quiz 10:...
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This note was uploaded on 01/27/2012 for the course ECON 509 taught by Professor Villamil during the Fall '08 term at University of Illinois, Urbana Champaign.

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Quick%20Quiz%2010%21 - will increase NX in Europe Solution...

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