GLOBE

Problem Set 70-1

1. Use a AA-DD model (not necessarily the diagram) to explain the sequential short-run adjustment process of an increase in the money supply on the following economic variables under floating exchange rates.


A. the interest rate
B. the nominal exchange rate
C. the real exchange rate
D. the current account balance
E. GNP
F. disposable income
G. consumption
H. saving
I. investment

©1999-2005 Steven M. Suranovic, ALL RIGHTS RESERVED
Last Updated on 2/18/05