Econ 476 Assignment 2

ECON 476v7

Assignment 2

Assignment 2 is worth 15% of your final grade, and should be done after you have

completed Units 6 through 9. Read the requirements for each question and plan your

responses carefully. Answer all five questions.

 

Although your responses should be concise, ensure that you answer all portions of each

question completely. The objective of this assignment is for you to synthesize the material

presented in Units 6 through 9, and to consider each question rationally and logically.

 

1. Graphically demonstrate and explain whether or not the degree of capital mobility

will affect monetary policy under flexible exchange rates.

 

2. Provide a review of the developments that led to the demise of the Bretton Woods

system of fixed exchange rates.

 

3. What happens to domestic income in the AS–AD model when the price of a critical,

imported, intermediate input suddenly rises? (Assume the demand for the input is

inelastic.)

 

4. Low-income nations have a dilemma as to whether to fix or float the currency

exchange rates. There are many factors that affect their decisions and how

effectively they can manage a financial system. Discuss a few of these factors that

contribute to the success of a policy.

 

5. Some remedies and preventive measures have been put forth to slow or forestall

currency crises, such as capital controls and intermediate regimes (i.e., fixed or

floating exchange rates). Discuss these measures and comment on whether they

 

would be effective. Explain why or why not.

    • 10 years ago
    Econ 476 Assignment 2_Solution ( Solved by CPA
    NOT RATED

    Purchase the answer to view it

    blurred-text
    • attachment
      econ_476_assignment_2_solution.docx