I can never recall all the relationships of monetary/fiscal policy. Here is how I am going to remember it. Here you only have to remember that currency DEPRECIATES given monetary expansion and then work out the other relationships. Could someone confirm this is correct? If government takes an expansionary monetary or fiscal policy: Policy…Currency…Current Account…Capital Account Monetary…Depreciates…Surplus…Deficit Fiscal…Appreciates…Deficit …Surplus
That’s right. You know that expansionary monetary policy causes currency to depreciate, just remember that and you can figure out the rest. Depreciating currency increases exports (CA surplus which causes Cap Acct deficit). Then just remember that expansionary fiscal policy has the exact opposite effect.
this is a good trick McLeod thx !!!
Any time
heeralm Wrote: ------------------------------------------------------- > this is a good trick McLeod > > thx !!! WTF!
Policy…Currency…Current Account…Capital Account Monetary…Depreciates…Surplus…Deficit Fiscal…Appreciates…Deficit …Surplus ********************************************** This is going to sound REALLY lame, but I am horrible with this stuff so this is how I remember it. The initials on the monetary line are MDSD I just remember this as Dr. San Diego. For some reason this sticks because it makes me think of “Where in the world is Carmen San Diego”. Once I can construct that line I know the fiscal line is just the opposite. Most of you are probably too young to even know what that means, so it won’t help…but maybe some old guy will remember it…Smarshy? Edit: I am not a big propenent of shortcut vs. learning the material, but I will take whatever I can get for this exam.
rock-a-pella baby