<p>The DD curve will not be downward sloping because of the value effect dominating initially. It will shift to the left.
<a href="https://i.sstatic.net/FFNe7.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/FFNe7.png" alt="enter image description here" /></a></p>
<p>Hence, a temporary expansionary fiscal policy or monetary policy can be used to dampen the impact of the J curve.</p>

CC BY-SA 4.0
2022-06-28T03:04:01.190Z
2022-06-28T03:04:01.190Z
Pallak Goyal
<blockquote>
  <p>Assume that the J-curve is true. What would the DD curve look like during the early period of the J-curve (where the value effect dominates)?  What would the effect of temporary changes in monetary and fiscal policy look like with this DD curve?</p>
</blockquote>

<p>I assume that the DD curve might be downward sloping because of the value effect, but I'm unsure how temporary changes in government spending and temporary changes in the money supply will affect the AA and DD schedules in this scenario.  Would somebody please explain?</p>

<macroeconomics><finance><international-trade><international-economics><exchange-rates>
J Curve and DD Schedule in the Short Run (International Finance)
EllipticalInitial
# J Curve and DD Schedule in the Short Run (International Finance)

(Asked by: username_0 on 2018-10-12)

> Assume that the J-curve is true. What would the DD curve look like during the early period of the J-curve (where the value effect dominates)? What would the effect of temporary changes in monetary and fiscal policy look like with this DD curve?

I assume that the DD curve might be downward sloping because of the value effect, but I'm unsure how temporary changes in government spending and temporary changes in the money supply will affect the AA and DD schedules in this scenario. Would somebody please explain?

**Tags:** macroeconomics, finance, international-trade, international-economics, exchange-rates


---

## 1 answers

### Answer by username_1 on 2022-06-28. Score: 0

The DD curve will not be downward sloping because of the value effect dominating initially. It will shift to the left.
[![enter image description here](https://i.sstatic.net/FFNe7.png)](https://i.sstatic.net/FFNe7.png)

Hence, a temporary expansionary fiscal policy or monetary policy can be used to dampen the impact of the J curve.


---

