CHAPTER 16 Economic Shocks to Nations with Flexible Exchange Rates Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-1 Analysis Methodology: Three Analytical Steps Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-2 Real Goods Market: Economic Setting Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-3 Real Loanable Funds Market: Economic Setting Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-4 Foreign Exchange Market: Economic Setting Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-5 Effect of Increased Government Borrowing on the Real Loanable Funds Market Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-6 Effects of a Net Increase in Aggregate Demand on the GDP Price Index and Real GDP Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-7 Method for Analyzing the Changes in Foreign Exchange Rates Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-8 Effects of Rising Real GDP on the Peso’s Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-9 Effects of Rising Mexican Prices on the Peso’s Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-17 Unstable Economic Feedback Effects Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-18 Stable Feedback Effects: Four Scenarios Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-19 An Overview of Expansionary Fiscal Policy with Flexible Exchange Rates and High-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-20 An Overview of Expansionary Fiscal Policy with Flexible Exchange Rates and Low-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-21 Effect of an Increase in Real Money Supply on the Real Loanable Funds Market Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-22 Progress Report on the Three-Sector Model Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-23 The Effects of an Increase in Aggregate Demand Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-24 Progress Report on the Three-Sector Model Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-25 Effects of Rising Mexican Real GDP on the Peso Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-26 Effects of Rising Mexican Prices on the Peso Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-27 Effects of a Falling Real Risk-Free Rate on the Peso’s Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-28 Changes in the Value of the Peso Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-29 Progress Report on the Three-Sector Model Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-30 Changes in Mexico’s Balance of Payments Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16-31 Initial Economic Shock, Primary Effects, and Second Round of Feedback Effects from Expansionary Monetary Policy Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved ... High-Mobility and Low-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16- 13 Changes in Mexico’s Balance of Payments Assuming... High-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16- 14 Changes in Mexico’s Balance of Payments Assuming Low-Mobility International... Flexible Exchange Rates and Low-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 16- 21 Effect of an Increase in Real Money