Question

in the 1990s germany attempted supply to control inflation through a restrictive monetary policy and high...

in the 1990s germany attempted supply to control inflation through a restrictive monetary policy and high interest rates . Explain how this might have influenced income and prices in the United states

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

A restrictive monetary policy in Germany increased German interest rates, which lowered investment and aggregate demand in Germany. A fall in aggregate demand in Germany decreased real GDP in Germany which decreased its import demand, which in turn decreased US export demand. A decrease in export demand in US will decrease US net exports, thus lowering US aggregate demand. In the US, aggregate demand curve would shift to left, thus decreasing both price level and income (real GDP) in US.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If the United States economy is dealing with high inflation and the Federal Reserve implements a...
If the United States economy is dealing with high inflation and the Federal Reserve implements a “quantitative tightening” monetary policy. Would the Fed – increase or decrease interest rates? Which two interest rates does the Federal Reserve control? (Hint – “DR” and “FFR”)
If the United States economy is dealing with high inflation and the Federal Reserve implements a...
If the United States economy is dealing with high inflation and the Federal Reserve implements a “quantitative tightening” monetary policy. Would the Fed – increase or decrease the money supply through FOMO? . If the United States economy is in a recession or slowing down and the Federal Reserve implements a “quantitative easing” monetary policy. Would the Fed – increase or decrease the money supply through FOMO
In the last half of the 1990s monetary policy was highly effective in the United States...
In the last half of the 1990s monetary policy was highly effective in the United States but highly ineffective in Japan. A. true B. false When the Fed auctions reserves through the term auction facility, the interest rate is set by the rate offered by the highest bidder. A. true B. false The term auction facility is the most frequently used monetary policy tool. A. true B. false The transactions demand for money will shift to the: A. right when...
Explain how can we use fiscal and monetary policy if we have a very high inflation...
Explain how can we use fiscal and monetary policy if we have a very high inflation rate in the country.
a. Monetary Policy involves changing taxes and government spending/ the design of currency/ exports/ the money...
a. Monetary Policy involves changing taxes and government spending/ the design of currency/ exports/ the money supply.   In the United States, Monetary Policy is implemented by the Federal Reserve/ President and Congress/ Secretary of the Treasury/ states. b. Contractionary Monetary Policy/ Lower prices/ Expansionary MonetaryPolicy/ Larger coins can be used to address a Recessionary Gap; while Expansionary MonetaryPolicy/ smaller coins/ Contractionary Monetary Policy/ higher prices can be used to address an Inflationary Gap. c.  To enact Contractionary Monetary Policy, the central bank...
Monetary policy is more effective if: A. the inflation rate in the country has hovered close...
Monetary policy is more effective if: A. the inflation rate in the country has hovered close to zero for the last three years because nominal interest rates will be lower so expansionary monetary policy will be more effective. B. the inflation rate in the country has averaged 3 percent for the last three years because nominal interest rates will be lower so expansionary monetary policy will be more effective. C. the inflation rate in the country has averaged 3 percent...
5 H ) Inflation allows central banks to run more expansionary monetary policy because it allows...
5 H ) Inflation allows central banks to run more expansionary monetary policy because it allows them to achieve : positive real interest rates so that monetary policy can be more expansive than it otherwise could be. positive nominal interest rates so that monetary policy can be more expansive than it otherwise could be. negative real interest rates so that monetary policy can be more expansive than it otherwise could be. negative nominal interest rates so that monetary policy can...
Question 1: Monetary Policy Suppose the economy is in an inflationary gap, and the Fed responds...
Question 1: Monetary Policy Suppose the economy is in an inflationary gap, and the Fed responds by conducting a contractionary monetary policy. a. Explain what the Fed does if it conducts open market operations to control inflation. b. Explain the effects of this monetary policy on interest rates, business investments, consumption expenditures, the value of the U.S. dollar, and the value of net exports.
The economy is going through a boom period with low unemployment and high inflation. Draw a...
The economy is going through a boom period with low unemployment and high inflation. Draw a graph of aggregate demand and aggregate supply to illustrate the current situation. Discuss fiscal policy measures that would help restore the economy to its natural rate of output. What kind of monetary policy will the central bank implement to reduce inflation? Describe the tools of monetary policy that can be used. Draw a graph to show the effect of the fiscal and monetary policies...
According to Irving Fisher equation, when velocity of money and output are fixed, the monetary authority...
According to Irving Fisher equation, when velocity of money and output are fixed, the monetary authority can control inflation rate through controlling money supply(monetary policy) . What does the quantity theory imply for the monetary policy in an economy with unstable velocity? Explain factors that might make velocity of money unstable and unpredictable?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT