Hi! Would really appreciate guidance and ideas on what you would do for the following task? :)))

*I've had a few comments on past tutor questions saying I have provided incomplete data or missing information so just to confirm this is ALL that I have been given

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SCENARIO: An open economy IS-LM-UIP model(LM curve is sloping upwards as money supply is held fixed not the interest rate)

• IS: Y = C(Y-T)+I(Y,i)+G+NX(Y,Y*,E)
• LM: M/Y = YL(i)
• UIP: i = i* - [ (E^e - E) / E ]

( E^e is expected future nominal exchange rate and E is the current nominal exchange rate )

Details: Model can be used to reflect either a floating exchange rate regime or a fixed exchange rate regime.

ASSUME THAT- the expected future inflation rate is zero (which is why i rather than r appears in the IS expression); the Marshall-Lerner condition holds; and P* and P are exogenously fixed and unchanging (which is why E rather than appears in the IS expression).

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TASK ONE: For an economy operating under (1)a floating exchange rate regime

Use the -above- model to show diagrammatically and explain the impact that enhancedexpectationsof a nominaldepreciation/devaluation of New Zealand's exchange rate would have on current i, Y, E and business fixed investment expenditure, I, for an economy under a floating exchange rate regime

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TASK TWO: For an economy operating under (2)a fixed exchange rate regime

_{*first do same as task one but for the different type of economy}

Use the -above- model to show diagrammatically and explain the impact that enhancedexpectationsof a nominaldepreciation/devaluation of New Zealand's exchange rate would have on current i, Y, E and business fixed investment expenditure, I, for an economy under a fixed exchange rate regime

_{*secondly add one additional comment}

Comment on the potential difficulties that a government would have in defending the exchange rate.