Answer to Question #120513 in Economics for chaymae

Question

Based on the appropriate graph(s) and equation(s), explain the effects of a permanent increase in the U.S. money supply Dollar/Euro exchange rate in the short run and in the long run.

Answer 1

A permanent increase in the U.S. money supply may not cause the change in Dollar/Euro exchange rate in the short run, but in the in the long run the Dollar/Euro exchange rate will decrease.