CHAPTER 17 Economic Shocks to Nations with Fixed Exchange Rates Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-1 Fixed Exchange Rate Set at Equilibrium Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-2 Fixed Exchange Rate Set below Equilibrium Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-3 Fixed Exchange Rate Set above Equilibrium Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-4 Central Bank Intervention When the Dollar Is Undervalued Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-5 Change in the Monetary Base If the Exchange Rate Is Set below Equilibrium Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-6 Central Bank Intervention When the Dollar Is Overvalued Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-7 Change in China’s Monetary Base If the Fixed Exchange Rate Is Set above Equilibrium Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-8 Unemployment Rate in Thailand, 1985–1995 Source: International Monetary Fund (IMF), International Financial Statistics Online, http://ifs.apdi.net/imf/ (accessed January 16, 2006) Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-9 Thailand’s Real Goods Market: Economic Setting Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-30 Effects of a Rising Real Risk-free Interest Rate on the Peso’s Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-31 BCRA Intervenes to Fix the Peso Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-32 Central Bank Intervention Raises Argentina’s Monetary Base and BCRA’s International Reserves Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-33 Changes in Argentina’s Balance of Payments Assuming High-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-34 Changes in Argentina’s Balance of Payments Assuming Low-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-35 An Overview of Expansionary Fiscal Policy with Fixed Exchange Rates and High-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-36 An Overview of Expansionary Fiscal Policy with Fixed Exchange Rates and Low-Mobility International Capital Markets Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-37 Economic Effects of Expansionary Monetary Policy for a Nation with a Fixed Exchange Rate Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-38 Changes in the Value of the Peso Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-39 Effects of Intervention by BCRA to Raise the Peso’s Value Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M17-2 Accounting Entries When BCRA Sells Dollars in the Foreign Exchange Market to a Foreign Resident Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M17-3 Effects of Central Bank Intervention on Argentina’s Balance of Payments When the Counterparty Is a Foreign Resident Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M17-4 Accounting Entries When BCRA Sells Dollars in the Foreign Exchange Market Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit M17-5 Effects of Central Bank Intervention on Argentina’s Balance of Payments When the Counterparty Is an Argentine Resident Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17-40 Effects of Expansionary Monetary Policy on Argentina’s Balance of Payments Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved ... Exhibit 17- 18 Increasing Aggregate Demand Raised Thailand’s GDP Price Index and Real GDP Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17- 19 Banks in Thailand... 17- 23 Economic Setting in Argentina’s Real Goods Market Copyright© 2008 South-Western, a part of Cengage Learning All rights reserved Exhibit 17- 24 Economic Setting in Argentina’s Real Loanable... part of Cengage Learning All rights reserved Exhibit M17-1 Earning Profits by Borrowing Dollars and Investing in Baht Assets Copyright© 2008 South-Western, a part of Cengage Learning All rights