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graphically compare effects of monetary or fiscal expansion on equilibrium output in closed and open economy. EXPLAIN your results
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- What does it mean by "aggregate demand and aggregate supply" when pertaining to macroeconomic policy in an open economy?Consider the classical open-economy macroeconomic model. Explain how a Federal Reserve action such as buying bonds impacts an economy that is operating under the following assumptions: exchange rates are flexible but wages and prices are sticky, there is perfect capital mobility and the economy is already at full employment. Be clear how it impacts GDP, unemployment, inflation, and the exchange rate. Provide the necessary equations to support your answer and diagrams.Explain, with the aid of the IS-LM model for a closed economy, the impact of an expansionary fiscal and monetary policy on the interest rate and the level of output.
- In the context of an open economy 3-equations model, analyse with a diagram how a temporary positive demand shock (lasting only one period) is stabilised by the central bank, commenting on whether the over or under-shooting result still applies.The following question relates only to the equilibrium in the goods market IN A CLOSED ECONOMY and asks you to carry out a graphical analysis using both the Keynesian cross diagram together with the IS-MP diagram. >>>) Consider an open economy with a floating exchange rate regime. After a terrorist attack in the country, consumer confidence and business confidence have taken a serious hit, negatively impacting consumption and investment in the economy. To prevent the economy from suffering too badly, the central bank wants to intervene in such a way as to keep output at the same level as before the terrorist attacks. Within the IS-MP framework, explain and illustrate graphically the impact of the drop in consumer and business confidence and subsequent central bank intervention on equilibrium output, the real interest rate, net cash outflow, the trade balance and the country’s real exchange rate. Is it possible for you to determine the overall impact on consumption and…Explain the links between an expansionary monetary stimulus and the foreign exchange rate.
- compare the strengths and limitations of the circular flow model versus an open-economy Keynesian cross model with autonomous investmentBriefly suggest Fiscal Policy or Monetary Policy Measures or Mix of Both to minimize the effects of this pandemic(covid-19) situationWhich of the following is a plausible effect of a rescue package offered by the IMF after a country gets hit by a financial crisis? I. The rescue package can compensate for the lack of private lending during the crisis. II. The rescue package can restore investor confidence by ensuring that there is no moral hazard problem. III. The rescue package can limit any contagion effects. IV. The rescue package includes conditions from the IMF that are aimed at ending the financial crisis. A) I, II and III B) I, III and IV C) II, III and IV D) I, II, III and IV E) None of the above
- Which of the following graphs represents the macroeconomic effects of a sale of foreign currency by the Central Bank?Consider the following hypothetical open economy. According to the expenditure approach, for this economy, Y = C + I + G + NX. Additionally, for the year 2020 the economy is characterized as follows: National saving is 30 percent of GDP Investment is 20 percent of GDP Net capital outflow 1 trillion dollars In this economy in 2020, what is the level of GDP or Y? Please report your answer in trillions of dollars.when it comes to the application of how the federal budget deficit affects economic variables, what is the impact of a federal budget deficit on interest rates and the trade balance?