## WE WRITE CUSTOM ACADEMIC PAPERS

#### 100% Original, Plagiarism Free, Tailored to your instructions

Consider a world in which prices are sticky in the short-run and perfectly flexible in the long-run. APPP may not hold in the short run but does hold in the long-run. The world has two countries, the U.S. and Japan. Both countries are initially in a long-run equilibrium with fixed money supplies.
a. Suppose at time T, real GDP in the United States falls permanently. Draw two diagrams with the money market diagram for the US on the left and the expected return in \$/ exchange rate (\$/yen) diagram on the right. Label the short-run (impact) effect as point(s) B and the long-run effects as point(s) C.
b. What is the immediate effect of the shock in the United States on the U.S. interest rate and the exchange rate (\$/yen)? Give two reasons why the exchange rate changes the way it does.
c. How do nominal interest rates, prices, and the exchange rate evolve over time? Please use a separate time series diagram for each variable.
d. Did the exchange rate â€œovershoot?â€ If so, identify the overshooting in your diagram.
2. Suppose instead, real GDP in the United States falls temporarily instead. Contrast the immediate effect of the temporary shock on interest rates and the exchange rate compared to the permanent shock.
a. Draw two diagrams with the money market diagram for the US on the left and the expected return in \$/ exchange rate (\$/yen) diagram on the right. Label the impact effect, when the shock is temporary, as point B and the impact effect when the shock is permanent as point C.
b. Why are these impact effects on the exchange rate different? Explain.
c.Assuming again that the shock to real GDP in the US was temporary, what would happen to the nominal interest rate in the US and the exchange rate in the long-run. Explain.
3. Denmark pegs their currency, the krone, to the euro.
a. Draw two diagrams, side by side with the money market diagram for Denmark on the left and the expected return in krone / exchange rate diagram on the right hand side. Label the initial equilibrium point A. Denmark suffers from an adverse productivity shock and goes in a recession. Show how your two diagrams are affected by the recession in Denmark. Assume that the peg is credible.
b. Suppose Denmark prefers to fight the recession via counter-cyclical monetary policy by increasing the money supply in hopes of lowering interest rates in Denmark. Explain what would happenâ€¦i.e., would they be successful or not? Be sure to mention capital flows and use the term(s) â€˜capital flightâ€™ and/or â€˜hot money,â€™ whichever applies.

# Our Service Charter

1. ### Excellent Quality / 100% Plagiarism-Free

We employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
2. ### Free Revisions

We keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
3. ### Confidentiality / 100% No Disclosure

We make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
4. ### Money Back Guarantee

If the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.

We have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.

Excellent Quality
Zero Plagiarism
Expert Writers

or