Impact on the value of dollar and aggregate expenditure model.
1. A.Explain what happens to the value of the dollar when interest rates in the rest of the world increase.
B. Explain what happens to the value of the dollar when our trading partner experiences a recession. (Assume the trading partner is an importer of U.S. goods and then assume the trading partner in an exporter to the U.S.)
2. Using the data from the table below, graph an aggregate expenditures curve.
Output/
Income |
Aggregate Spending |
| 0 |
100 |
| 100 |
180 |
| 200 |
260 |
| 300 |
340 |
| 400 |
420 |
| 500 |
500 |
| 600 |
580 |
| 700 |
660 |
a. Illustrate what is equilibrium output?
b. Illustrate what is autonomous spending when income is 200? 500? 100
c.What is induced spending when income is 200? 500?
d.What is the mpe?
e.What is the multiplier?