1. World
United States
13.1 1

2. Sellers of Imports to the U.S.
Buyers of U.S. Exports
Sellers of Imports to the U.S.
13.2

3. A (Desired Consumption)
200
Quantity of Wine
100
A (Desired Consumption)
13.3 50
100
Quantity of Cloth 3

4. B (Desired Consumption) 100
200
Quantity of Wine
B (Desired Consumption)
100
13.4 D
100
200
300
400
Quantity of Cloth 4

5. Table 13.1

6. Table 13.2

7. S
Euros per Dollar E D
13.5
Quantity of Dollars

8. Euros per Dollar S1 S2 E1 E2 D Quantity of Dollars
Depreciation of the Dollar E2 D
13.6
Quantity of Dollars 8

9. Table 13.3 (footnote suppressed)

10. Imports
Exports
13.7 10

11. Expansionary monetary policy Lowers interest rates
Investment is encouraged
Aggregate demand rises
Equilibrium GDP rises
Reduces capital inflows
Reduces demand for dollars, leading to depreciation
Reduces imports and increases exports
13.Sec4.4

12. Smarket e* Dwith intervention Dmarket Per Unit of Domestic Currency
surplus
Per Unit of Domestic Currency
Units of Foreign Exchange e*
Dwith intervention
Dmarket
13.8
Quantity of the Domestic Currency 12