Question 5 solution needed 3.In a system of fairly high (but imperfect) capital mobility and a fixedexchange rate within the Mundell-Fleming open economy macroeconomic(IS-LM-BP) model, an expansionary fiscal policy can result in either a surplusor a deficit in the balance of payments. Why is it so? Explain and illustrategraphically.4.Present graphically and explain the shape of a standard Keynesian aggregatesupply curve. Does the slope of a Keynesian aggregate supply curve varydepending on whether nominal (money) wage is variable (flexible) or fixed?Explain why and demonstrate graphically.Assume there is an exogenous drop in the price of imported oil. UsingKeynesian graphical model and analysis, explain how such a shock wouldaffect aggregate output and price level. Explain the role inflationaryexpectations play in this adjustment.5.

Reduction within the prices of imported oil would cause a decline within the price index and a…

Assume there is an exogenous drop in the price of imported oil. Using Keynesian graphical model and analysis, explain how such a shock would affect aggregate output and price level. Explain the role inflationary expectations play in this adjustment.

Assume there is an exogenous drop in the price of imported oil. Using Keynesian graphical model and analysis, explain how such a shock would affect aggregate output and price level. Explain the role inflationary expectations play in this adjustment.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Question 5 solution needed

3.
In a system of fairly high (but imperfect) capital mobility and a fixed
exchange rate within the Mundell-Fleming open economy macroeconomic
(IS-LM-BP) model, an expansionary fiscal policy can result in either a surplus
or a deficit in the balance of payments. Why is it so? Explain and illustrate
graphically.
4.
Present graphically and explain the shape of a standard Keynesian aggregate
supply curve. Does the slope of a Keynesian aggregate supply curve vary
depending on whether nominal (money) wage is variable (flexible) or fixed?
Explain why and demonstrate graphically.
Assume there is an exogenous drop in the price of imported oil. Using
Keynesian graphical model and analysis, explain how such a shock would
affect aggregate output and price level. Explain the role inflationary
expectations play in this adjustment.
5.

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