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PROBLEM - The DD-AA-XX Model (100 points): g Explain your reasoning carefully, step by step. Use diagrams to show the following. _QS_C;%_ separate diagram for

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PROBLEM - The DD-AA-XX Model (100 points): g Explain your reasoning carefully, step by step. Use diagrams to show the following. _QS_C;%_ separate diagram for each part. Use the DD-AA-XX Model to demonstrate the following and exp altg briefly. Use causal chains (like Mst A} Bt ) 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. (10 points each) (a) What does the DD curve represent? (Be precise.) (b) What does the AA curve represent? (c) What does the XX curve represent? o (d) Draw the DD-AA-XX model and label it clearly. What does the equilibrium represent? (e) Draw the DD-AA diagram and show the short-run effect of a temporary expansionary monetary policy under a flexible exchange rate regime. Results? : | (f) Draw the DD-AA diagram and show the short-run effect of a temporary expansionary fisca policy under a flexible exchange rate regime. Results? : ] (g) Draw the DD-AA diagram and show the effect of a temporary expansionary monetary policy under the fixed exchange rate regime. Results? ; (h) Draw the DD-AA diagram and show the effect of a temporary expansionary fiscal policy under the fixed exchange rate regime. Results? (i) Draw the DD-AA diagram and show the effect of a devaluation under the fixed exchange rate regime. What are the results? (3) Fill out the table below to summarize the effects of monetary and fiscal policy under fixed and flexible exchange rates. e - - - Flexible Exchange Rates

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