Question

Explain and draw a graph to illustrate how a depreciation of the dollar changes the short-run...

  1. Explain and draw a graph to illustrate how a depreciation of the dollar changes the short-run equilibrium real GDP and price level.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

When the dollar depreciates the goods become more competitive and cheaper and the demand for the local goods increase in the interenational market. this will shift the demand curve to the right and the new equilibrium will be at a higher price and higher level of output. Here, the equilibrium moved from point E1 to E2.

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
Starting from long-run equilibrium, draw an aggregate demand-aggregate supply graph to illustrate the difference between a...
Starting from long-run equilibrium, draw an aggregate demand-aggregate supply graph to illustrate the difference between a long-run and a short-run equilibrium due to an increase in aggregate demand. Once the economy is in the short-run equilibrium, explain and graphically illustrate how long-run equilibrium will be restored.
Consider an economy which is in the long-run and short-run equilibrium. Propose a factor that will...
Consider an economy which is in the long-run and short-run equilibrium. Propose a factor that will lead to a decrease in the general price level and an increase in the real GDP at the same time in the short run while the LRAS curve remains unchanged. You should clearly state the factor, how the factor changes (increase or decrease) and explain how it shifts the relevant curve in the P-Y space leading to a decrease in the general price level...
1. In going from the short run equilibrium to the long-run equilibrium, briefly explain how the...
1. In going from the short run equilibrium to the long-run equilibrium, briefly explain how the composition of real GDP may have changed. 2. Briefly explain what the difference in the growth rate of potential GDP might occur If instead of a decrease in the net tax rate, there was an increase in government purchases. 3. Briefly explain what the “Money Neutrality” argument implies about the effectiveness of discretionary fiscal policy and the impact on potential real GDP and price...
The aggregate-demand (AD), short-run aggregate supply (AS), and long-run aggregate-supply (ASLR) schedules for a given economy...
The aggregate-demand (AD), short-run aggregate supply (AS), and long-run aggregate-supply (ASLR) schedules for a given economy are as follows. The schedules show the GDP price index (P) versus real GDP (Q), with Q measured in trillions of constant (real) dollars. Note that ASLR is potential output (Qf). P AD AS ASLR 60 7 1 3 90 6 2 3 120 5 3 3 140 4 4 3 160 3 5 3 170 2 6 3 1. Graph the AD, AS,...
Consider the short-run money market model and the short-run exchange rate model together: a. Draw the...
Consider the short-run money market model and the short-run exchange rate model together: a. Draw the combined models in a single graph, showing the initial domestic interest rate (r1) and the initial exchange rate (e1) b. Show how the short-run model would change with a decrease in domestic money supply, specifically noting the impact on domestic interest rates, exchange rates, and the price level c. Following on from part (b), explain why the exchange rate changes d. In the long-run,...
Explain how the Federal Reserve’s lowering of interest rates affects the following variables in the short...
Explain how the Federal Reserve’s lowering of interest rates affects the following variables in the short run: household consumption, business investment, real GDP, and the price level. Insert or attach a well-labeled Aggregate Demand/Aggregate Supply graph that would illustrate the effect of a decrease in interest rates when the economy is in a recession in the Keynesian zone.
Draw a graph of a perfectly competitive firm in the short run that is earning losses...
Draw a graph of a perfectly competitive firm in the short run that is earning losses but will stay in business in the short run. Label everything carefully including the axes, the profit maximizing quantity, price, and economic losses. Explain carefully why the firm will choose to stay in business in the short run. Label the price at which the firm is indifferent between shutting down and staying open, Psd, on the graph.
Explain how a firm may transition from the short-run production decision to the long-run production decision....
Explain how a firm may transition from the short-run production decision to the long-run production decision. In your explanation, us applicable graphs to illustrate short-run and long-run laws in operation. (i) Explanation (ii) as part of your explanations, draw and properly label a short-run production-decision graph and long-run production-decision graph for illustration purposes).
Suppose the economy is in long-run equilibrium. In a short span of time, there is an...
Suppose the economy is in long-run equilibrium. In a short span of time, there is an increase in the number of highly educated workers and an improvement in farming technologies related to growing corn. In the short run, we would expect the price level to rise and real GDP to fall. the price level to fall and real GDP to rise. the price level to fall and real GDP to fall. the price level and real GDP both to stay...
Illustrate and explain how an economy that is at short-run equilibrium can still experience an expansionary...
Illustrate and explain how an economy that is at short-run equilibrium can still experience an expansionary gap based on the AD-AS Model. Make sure you label your diagram appropriately.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT