INTERNATIONAL ECONOMICS EXERCISES

I COULD NOT FIND THE SOLUTIONS!!!!

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7. In general, under the monetary approach to the exchange rate, while the short -run interest rate does not depend on the absolute level of the money supply, continuing growth in the money supply eventually will affect the interest rate. b. while the long-run interest rate does depend on the absolute level of the money supply, continuing growth in the money supply does not affect the interest rate. while the long-run interest rate does not depend on the absolute level of the money supply, continuing growth in the money supply eventually will affect the interest rate. d the long-run interest rate does not depend on the absolute level of the money supply, and thus continuing growth in the money supply will not affect the interest rate. e. None of the above statements is true. 8. Suppose the money supply growth rate equals at which also produces ongoing inflation at the same rate. Suppose further that there is an unexpected increase (Ant) in the growth rate of the money supply. Under the monetary approach, we would expect the price level to a jump to a higher level and increase at a faster rate (7+An) b, increase at a faster rate (ntax) c. exhibit a rate of increase that gradually rises to (tan) d. remain unchanged. 9. Suppose the money supply growth rate equals it which also produces ongoing inflation at the same rate. Suppose further that there is an unexpected decrease (Ant) in the growth rate of the money supply. Under the monetary approach to interest rates and exchange rate determination, we would expect exchange rate E [price of foreign currency in terms of domestic currency] to a, remain unchanged b. decrease and appreciate at the rate of (AR) c. decrease and depreciate at the rate of (1-AR). d. remain unchanged and depreciate at the rate of (7