Question
Under a fixed exchange rate system with perfect capital
mobility, what happens when the government increases its spending?Solution
In a fixed exchange rate system with perfect capital mobility, an increase in government spending shifts the IS curve to the right, increasing output and the interest rate. However, because capital is perfectly mobile, the higher domestic interest rate would attract foreign capital, leading to upward pressure on the exchange rate (appreciation). To maintain the fixed exchange rate, the central bank intervenes by increasing the money supply, which shifts the LM curve to the right, lowering the interest rate back to the world interest rate.
Tillers cut near base at 45° angle and developing buds or ripening grains chewed are the damaging symptoms of _____
The short range forecasting is issued twice a day and is valid for ………………………
Currently Food Authority has commissioned 21 scientific panels that comprises of ………. vertical and ………. horizontal panels.
...A drought year as a whole is defined by the Indian Meteorological Department (IMD) as a year in which, the overall rainfall deficiency is more than 10 ...
Which of the following is largest and stoutest part of insect leg?
An 'artificial seed' consists of gel enclosing one of the following components. Which one?
Marginal utility of money cannot be:
Salai gum is obtained from which tree species?
What is the function of a camshaft in an internal combustion engine?
ACABC (Agri-Clinic or Agri-business Centre) takes training from which of the following organization?
