Question
Assuming imperfect capital mobility, analyze the effects of the following policy actions for both the fixed and flexible exchange rate cases: a. A decline in
Assuming imperfect capital mobility, analyze the effects of the following policy actions for both the fixed and flexible exchange rate cases:
a. A decline in the money supply from M0 to M1. b. A decrease in government spending from G0 to G1.
Include in your answer the effects of the policy action on both income and the interest rate,
as well as on the balance of payments and the exchange rate.
ANSWER ONLY BY DIAGRAMS
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International Economics
Authors: Thomas A. Pugel
15th edition
73523178, 978-0077769529, 007776952X, 978-0073523170
