Question
In a small open economy with a floating exchange rate,
the supply of real money balances is fixed and a rise in government spending ______Solution
As G increases, IS 1 shifts to IS 2 . At new equilibrium e', interest rate also increase and i > i*. Here,2 things are happening: a) there will now be capital inflow as a result capital A/c surplus b) Since, AD and Y increased, import demand will increase which will lead to current A/c deficit. Since, the magnitude of Capital A/c surplus will be much higher than the magnitude of current A/c deficit; there is BOP surplus. As a result domestic currency appreciates; dd for rupee has increased. As a result Exports decrease and Imports increase (imports have become cheaper) [Net exports falls] IS shifts back to initial level and equilibrium in the goods market is restored. In a small open economy with a floating exchange rate, the supply of real money balances is fixed and a rise in government spending raises the interest rate, so that income must rise to maintain equilibrium in the money market.
Select the option that can be used as a one-word substitute for the given group of words.
Take great pleasure.
Select the wrongly spelt word.
Select the correct SYNONYM of the given word.
atrocious
15. A) Certain    B) Velocity   C) Slowness    D) Settled
Someone who can use both his hands with equal facilities
Select the correct SYNONYM of the given word.Â
celestial
Which of the following sentences is correct?
Amatya said to me, “We are to leave for dance early.”
In their defence, Facebook representatives present (A) at the meeting have said the algorithm has been designed (B) to decide which advertisments (C) d...
Chintzy