Economics Homework Help

Q1:Foreign Exchange Market with Two Currencies: Euros and Dollars

If the European Central Bank reduces the money supply, what happens to:

Interest rates paid on liquid assets held in euros: [ Select ] [“Increase“, “Impact is indeterminant“, “Decrease“, “Remain constant“]

Foreign Exchange Supply curve: [ Select ] [“remains constant“, “shifts left“, “impact is indeterminant“, “shifts right“]

Foreign Exchange Demand curve: [ Select ] [“shifts right“, “remains constant“, “impact is indeterminant“, “shifts left“]

Exchange rate: [ Select ] [“impact is indeterminant“, “remains constant“, “decreases“, “increases“]

Quantity: [ Select ] [“impact is indeterminant“, “remains constant“, “decreases“, “increases“]

Net exports from the European Union: [ Select ] [“increase“, “impact is indeterminant“, “decrease“, “remain constant“]

Relative to the euro, the value of a dollar: [ Select ] [“depreciated“, “remains constant“, “appreciated“, “cannot be determined“]

Inflation in the European Union: [ Select ] [“decreases“, “cannot be determined“, “remains constant“, “increases“]

Q2:$3.50 buys € 2

In Los Angeles, one taco costs $1.75.
In Berlin, one taco costs € 2.50.

In the long run, what is the real value of € 200 in dollars?

(Please input a numerical value only.)

Q3:Are there contexts in which command-and-control policies might work better than market-oriented polices? If so, in which contexts and why? In which contexts would you prefer to use market-oriented policies instead and why?