1. When a change in interest rates impacts the international value of the dollar
ID: 2440513 • Letter: 1
Question
1. When a change in interest rates impacts the international value of the dollar limiting the effectiveness of fiscal policy, it is due to crowding out. crowding in. the slope of the AS curve. the net export effect. exogenous shocks. 2.If Congress votes to increase spending, how would output, the interest rates and the international value of the dollar (based on change in interest rates) change as a result?Output / Interest Rates / International Value of Dollar Increase / Decrease / Increase Increase / Increase/ Increase Increase / Increase / Decrease Decrease / Decrease / Increase Decrease / Increase / Decrease 3. If, as part of supply side policy, Congress votes to decrease business taxes how will output, price level, and real interest rates be impacted?
Output / Price Level / Interest Rates Increase / Increase / Increase Increase / Decrease / Increase Increase / Decrease / Decrease Decrease / Increase / Increase Decrease / Decrease / Decrease 1. When a change in interest rates impacts the international value of the dollar limiting the effectiveness of fiscal policy, it is due to crowding out. crowding in. the slope of the AS curve. the net export effect. exogenous shocks.
Explanation / Answer
a) "Crowding out" It increases the interest rate and cause an inflow of foreign capital in the nation increasing the value of the local currency and affecting the exports.
b) The output will increase, the interest rate will increase and the value of the dollar will increase.
c) The output will increase, the price level will decrease and it will act an increase the value for money which will decrease the interest rate.
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