Use the open-economy IS/LM model (the Mundell-Fleming model) to predict what will happen to Y, r, I, EX, NX under a floating (flexible) exchange rate regime in a small open economy. Be sure to depict the appropriate graphs, axes labels, and curve shifts in all your answers. a. An increase in consumer confidence about the future induces consumers to spend less and save more. b. The “Buy American” campaign ads induce domestic consumers to purchase fewer foreign-made goods. c. The central bank sells bonds to the public.
Use the open-economy IS/LM model (the Mundell-Fleming model) to predict what will happen to Y, r, I, EX, NX under a floating (flexible) exchange rate regime in a small open economy. Be sure to depict the appropriate graphs, axes labels, and curve shifts in all your answers. a. An increase in consumer confidence about the future induces consumers to spend less and save more. b. The “Buy American” campaign ads induce domestic consumers to purchase fewer foreign-made goods. c. The central bank sells bonds to the public.
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter6: Managing In The Global Economy
Section: Chapter Questions
Problem 12E
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Use the open-economy IS/LM model (the Mundell-Fleming model) to predict what will happen to Y, r, I, EX, NX under a floating (flexible) exchange rate regime in a small open economy. Be sure to depict the appropriate graphs, axes labels, and curve shifts in all your answers.
a. An increase in consumer confidence about the future induces consumers to spend less and save more.
b. The “Buy American” campaign ads induce domestic consumers to purchase fewer foreign-made goods.
c. The central bank sells bonds to the public.
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