Economics Final

Question 1

Exchange rate affects Inflation rate

Answer 1

Cost push: 成本

Demand pull: 进口减少出口增加

Question 2

Exchange rate affects BOP

Answer 2

Marshall Lerner
进出口总额
CA balance

Question 3

BOP affects exchange rate

Answer 3

IF DEFICIT. Demand of RMB low. Supply of USD high.

Question 4

Inflation affects BOP

Answer 4

1) INFLATION UP, 国外商品相对便宜，IMPORTS up

2）inflation up，confidence down，less investment，BOP down

Question 5

Inflation affects Exchange rate

Answer 5

Inflation makes people don’t want to hold RMB
RMB demand to the left, USD supply to the right.
RMB supply to the left, USD demand to the right.
Exchange rate up.

Question 6

BOP affects inflation

Answer 6

BOP up, AD up, price level up, inflation up.

Question 7

Problems of CPI

Answer 7

Introduction of new products
Substitution bias
Unmeasured quality change
Discount sales

Question 8

Fisher equation

Answer 8

V=(P*Y)/M

Y is real GDP

Question 9

Causes of inflation

Answer 9

Demand pull, cost push,

BOP( demand pull )
Exchange rate cost push and demand pull

supply of money( fisher equation and gov.)