Short answers please asap.
1. The Kingdom of Kong pegs its currency, the "Konger," to the U.S. dollar.
2. Suppose that The Kingdom of Kong experiences persistently higher inflation than the U.S. does. In the long run, what should happen to the value of the Konger relative to that of the dollar?
3. As a result of the developments described above, the Konger is the subject of a speculative attack. How could the Kingdom of Kong's central bank respond to defend the peg (i.e., maintain the fixed exchange rate)?
4. Identify a potential drawback of the policy identified in your answer to the previous question.
5. Use the AS-AD framework to explain why traditional monetary and fiscal policies are of limited use in this situation.
6. What term is commonly used to refer to this economic situation?
7. In general, should a country's policymakers be concerned if the country has trade imbalances with other countries?
8. If your answer to the previous question is "no," are there situations in which policymakers should be concerned about running a trade deficit? If your answer is "yes," are there situations in which policymakers should not be concerned about running a trade deficit?
9. What is the difference between a "demand-side" fiscal policy and a "supply-side" fiscal policy? Include an example of each in your answer
Short answers please asap.
1. The Kingdom of Kong pegs its currency, the "Konger," to the U.S. dollar.
2. Suppose that The Kingdom of Kong experiences persistently higher inflation than the U.S. does. In the long run, what should happen to the value of the Konger relative to that of the dollar?
3. As a result of the developments described above, the Konger is the subject of a speculative attack. How could the Kingdom of Kong's central bank respond to defend the peg (i.e., maintain the fixed exchange rate)?
4. Identify a potential drawback of the policy identified in your answer to the previous question.
5. Use the AS-AD framework to explain why traditional monetary and fiscal policies are of limited use in this situation.
6. What term is commonly used to refer to this economic situation?
7. In general, should a country's policymakers be concerned if the country has trade imbalances with other countries?
8. If your answer to the previous question is "no," are there situations in which policymakers should be concerned about running a trade deficit? If your answer is "yes," are there situations in which policymakers should not be concerned about running a trade deficit?
9. What is the difference between a "demand-side" fiscal policy and a "supply-side" fiscal policy? Include an example of each in your answer
