2000, Question 2 · 4 points
Dollar and franc with trade and interest shocks
In a two country world with flexible exchange rates, explain how more US demand for French goods affects the supply and value of the dollar, then how higher US real interest rates affect the dollar's value and the quantity of dollars supplied.
This exam had three free-response questions with 10 minutes of planning and 50 minutes of writing, and the directions suggested spending about half the time on Question 1 and splitting the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.
1 Read the question
The question is College Board's, from the 2000 exam. It starts on page 3 of the PDF. College Board no longer posts this exam, so it opens from the copy of College Board's PDF that the Internet Archive saved on September 28, 2023.
2 Write your answer
Answer each part the way you would on the exam, in full sentences, with your work shown. Your writing saves as you type.
3 Score it
Score your answer against College Board's scoring guidelines, one point at a time. Give yourself a point only when your answer says what the guideline asks for.
Scoring guidelines (PDF, page 3)
Question, scoring guidelines and Chief Reader report: College Board, from the Internet Archive. The title, summary are ours.