Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Chapter 31, Problem 34APA
(a)
To determine
Identify the role of federal funds rate on the exchange rate.
(b)
To determine
Identify the role of expected federal funds rate on the exchange rate.
(c)
To determine
Determine how the expected inflation changes the expected federal funds rate as well as the exchange rate of the nation.
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List the sequence of events in the transmission from a rise in the federal funds rate to a change in the inflation rate.
When the Fed raises the federal funds rate, other short-term interest rates and the exchange rate _______.
A.
rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to decrease
B.
rise within a few weeks or months but the long-run interest rate rises almost immediately
C.
and the long-term interest rate rise the same day or the next day, but it takes a few weeks for consumption expenditure and investment to decrease
D.
rise the same day or the next day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to increase
When the Fed raises the federal funds rate, consumption expenditure, investment, and net exports _______ and aggregate demand _______.
A.…
Explain the Fed's policy tools and briefly describe how each works.
The Fed uses its policy tools to _______.
A.
regulate the amount of money circulating in the United States by printing enough money each year for the purchase of consumer goods and services
B.
influence the exchange rate and the country's trade balance by adjusting the interest rate
C.
keep the government budget debt under $20 trillion by adjusting loans to Congress
D.
influence the interest rate and regulate the amount of money circulating in the United States by adjusting the reserves of the banking system
An article in the Wall Street Journal in July 2020 discussed the
falling value of the U.S. dollar in exchange for other currencies.
The article noted that the decline in the value of the dollar "has
been accelerated by the Fed's decision to slash interest rates to
near zero, removing much of the differential between the U.S.
and other developed countries."
Why would the Fed reducing interest rates lead to a decline in
the value of the dollar?
OA. The lower interest rate makes foreign financial assets
less attractive, decreasing the supply of dollars.
OB. The Fed lowers interest rates by selling dollars in the
foreign exchange market, this increases the supply of
dollars.
OC. The lower interest rate makes U.S. financial assets less
attractive causing a decrease in demand for dollars.
OD. The lower interest rate makes U.S. financial assets
more attractive causing an increase in demand for
dollars.
Chapter 31 Solutions
Macroeconomics
Ch. 31.1 - Prob. 1RQCh. 31.1 - Prob. 2RQCh. 31.1 - Prob. 3RQCh. 31.1 - Prob. 4RQCh. 31.2 - Prob. 1RQCh. 31.2 - Prob. 2RQCh. 31.2 - Prob. 3RQCh. 31.3 - Prob. 1RQCh. 31.3 - Prob. 2RQCh. 31.3 - Prob. 3RQ
Ch. 31.3 - Prob. 4RQCh. 31.4 - Prob. 1RQCh. 31.4 - Prob. 2RQCh. 31.4 - Prob. 3RQCh. 31.4 - Prob. 4RQCh. 31.4 - Prob. 5RQCh. 31 - Prob. 1SPACh. 31 - Prob. 2SPACh. 31 - Prob. 3SPACh. 31 - Prob. 4SPACh. 31 - Prob. 5SPACh. 31 - Prob. 6SPACh. 31 - Prob. 7SPACh. 31 - Prob. 8SPACh. 31 - Prob. 9SPACh. 31 - Prob. 10SPACh. 31 - Prob. 11SPACh. 31 - Prob. 12SPACh. 31 - Prob. 13SPACh. 31 - Prob. 14SPACh. 31 - Prob. 15SPACh. 31 - Prob. 16APACh. 31 - Prob. 17APACh. 31 - Prob. 18APACh. 31 - Prob. 19APACh. 31 - Prob. 20APACh. 31 - Prob. 21APACh. 31 - Prob. 22APACh. 31 - Prob. 23APACh. 31 - Prob. 24APACh. 31 - Prob. 25APACh. 31 - Prob. 26APACh. 31 - Prob. 27APACh. 31 - Prob. 28APACh. 31 - Prob. 29APACh. 31 - Prob. 30APACh. 31 - Prob. 31APACh. 31 - Prob. 32APACh. 31 - Prob. 33APACh. 31 - Prob. 34APACh. 31 - Prob. 35APACh. 31 - Prob. 36APACh. 31 - Prob. 37APACh. 31 - Prob. 38APACh. 31 - Prob. 39APACh. 31 - Prob. 40APACh. 31 - Prob. 41APA
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