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Explain how monetary policy affects real output in a small open economy with flexible exchange rates. Explain which component of aggregate demand is most affected and why.

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter14: Modern Macroeconomics And Monetary Policy

Section: Chapter Questions

Problem 7CQ

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Explain how monetary policy affects real output in
a small open economy with flexible exchange
rates. Explain which component of aggregate
demand is most affected and why.

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