Y = C (Y – T) + I (r* ) + G – NX(e) M/P = L(r*, Y) a) If the taxes are raised in this economy, and assuming a floating exchange rate regime; explain what happens to: !". ii. the exchange rate, and,

Y = C (Y – T) + I (r* ) + G – NX(e) M/P = L(r*, Y) a) If the taxes are raised in this economy, and assuming a floating exchange rate regime; explain what happens to: !". ii. the exchange rate, and,

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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Question

An economy is described by the following two
equations.
Y = C (Y – T) + I (r* ) + G – NX(e)
M/P = L(r*, Y)
a) If the taxes are raised in this economy, and
assuming a floating exchange rate regime;
explain what happens to: !?.
ii.
the exchange rate, and,

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