Foreign Exchange Graph Macroeconomics
Im confused about the Loanable funds, foreign exchange, and AD-AS graphs?
ADSENSE
In macroeconomics class, we’re learning how the loanable funds, foreign exchange (US$) and AD-AS markets interact with each other. I’m very confused right now and forgot which graph does what… I want to know how to graph any kind to situation (i.e. I want to learn how to apply all three graphs to an expansionary monetary policy).
Explanation please.. this is the basic macroeconomics class in college.
There are two important categories of economic agents — those that save and are willing to provide savings to the financial markets (both domestic savers and foreign savers) and borrowers (either households, firms, or foreigners).
If the demand for loanable funds goes up, this drives up interest rates. If the supply of savings goes up, the interest must fall.
You might find this website helpful:
http://www.reffonomics.com/TRB/chapter30/loanablefundsmarket12.swf
Comprehensive Macroeconomics Solution for 2550 – Section 1 – Item 3
