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    How does each of the following shifts affect the US dollar real and nominal exchange rates against foreign currencies.

    (a) The aggregate productivity level rises in the US.

    (b) Productivity rises in the traded sector of the US economy.

    (c) Productivity rises in the nontraded sector of the US economy.

    (d) The aggregate demand for US goods goes up.

    (e) The overall level of spending does not change but domestic residents decide to spend more of their income on nontraded products relative to traded goods.

    (f) The overall level of spending does not change but domestic residents decide to spend more of their income on traded products relative to nontraded goods.

    (g) Foreign residents shift their demand away from their own goods and towards the home country's exports.


    My answers:

    a) Decrease in real and nominal exchange rates

    b) Increase in real and nominal exchange rates

    c) No change in real and nominal exchange rates

    d) Increase in real and nominal exchange rates

    e) Increase in real and nominal exchange rates

    f) Decrease in real and nominal exchange rates

    g) Increase in real and nominal exchange rates

    I'm quite sure I got atleast a couple wrong. I would greatly appreciate if you could point them out.
 
 
 
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Updated: November 13, 2017

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