Mundell-Fleming Model (a) Indicate whether the following statement is true, false, or uncertain and explain your answer using words, graphs and equations as appropriate. (i) In the Mundell-Fleming model with a floating exchange rate, a rise in the world interest rate will lead to both income and net exports rising. In a small open economy with a fixed exchange rate, an (ii) effective policy to increase equilibrium output is to increase the money supply. (iii) Imposing a tariff on imports will cause output to increase.

Mundell-Fleming Model (a) Indicate whether the following statement is true, false, or uncertain and explain your answer using words, graphs and equations as appropriate. (i) In the Mundell-Fleming model with a floating exchange rate, a rise in the world interest rate will lead to both income and net exports rising. In a small open economy with a fixed exchange rate, an (ii) effective policy to increase equilibrium output is to increase the money supply. (iii) Imposing a tariff on imports will cause output to increase.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 7PA

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