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please explain by detail Question 2 Suppose Brazil is currently at the full employment level with output at Yf and exchange rate of real per

please explain by detail

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Question 2 Suppose Brazil is currently at the full employment level with output at Yf and exchange rate of real per dollar at Ef . Suppose the Federal Reserve Bank in the US increases its nominal interest rate. (a) (b) Show the effect of this increase US interest rate on Brazilian exchange rate and output using the DDAA diagram and explain what are the effects in the assets and goods markets. Suppose the Brazilian government wants to stabilize the output, i.e. to make the output stay at YJf level. How will the Brazilian government adjust its monetary policy? What's the effect of this policy on its exchange rate? Show in the same DDAA diagram and explain what are the effects in the assets and goods markets. Suppose instead that the Brazilian government wants to restore full employment using scal policy. How could the Brazilian government adjust taxes to restore full employment. Show in the same DD-AA diagram and explain what are the effects in the assets and goods markets. Suppose the Brazilian government wants to stabilize the exchange rate, i.e. to make the exchange rate go back to Ef level. How will the Brazilian government change its scal policy? What's the effect of this policy on its output? Show in the same DDAA diagram and explain what are the effects in the assets and goods markets

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