Explain and use diagrams to show the following. Use a separate diagram for each part. Use the DD-AA-XX Model to demonstrate the following and explain briefly. Use causal chains (like Ms A B ) to show the effects of each policy and tell what the results of the policy are. Draw separate diagrams for each question. Be sure to label each answer.

1. Draw the DD-AA-XX model and label it clearly. What does the equilibrium represent?

2. Draw the DD-AA diagram and show the short-run effect of a temporary expansionary monetary policy under a flexible exchange rate regime. Results?

3. Draw the DD-AA diagram and show the short-run effect of a temporary expansionary fiscal policy under a flexible exchange rate regime. Results?

4. Draw the DD-AA diagram and show the effect of expansionary monetary policy under the fixed exchange rate regime. Results?

5. Draw the DD-AA diagram and show the effect of expansionary fiscal policy under the fixed exchange rate regime. Results?

6. Draw the DD-AA diagram and show the effect of a devaluation under the fixed exchange rate regime. What are the results?