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Consider the short-run impact of the U.S. monetary expansionary policy action on Bermuda, a small open economy that maintains a fixed exchange rate with the
Consider the short-run impact of the U.S. monetary expansionary policy action on Bermuda, a small open economy that maintains a fixed exchange rate with the U.S. dollar. a. What is the impact of the U.S. policy action on consumption, investment, and the unemployment rate in Bermuda? Explain. b. Are there any other macroeconomic variables in Bermuda that would be affected by the U.S. policy? c. Can Bermuda counteract the U.S. policy? If not, why not. If so, how and what would be the impact on the Bermudan economy.
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