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Use the open economy IS-LM model presented in class to answer the following questions: What are the effects of a decrease in foreign output (Y*)
Use the open economy IS-LM model presented in class to answer the following questions:
- What are the effects of a decrease in foreign output (Y*) on domestic output (Y) and domestic interest rate (i)? [ show on the IS-LM graph].
- What are the effects on consumption ( C ), investment (I), and net exports (NX)?
- What are the effects of an increase in foreign interest rate (i*) on domestic output (Y) and domestic interest rate (i)? [ show on a separate IS-LM graph].
- What are the effects on consumption ( C ), investment (I), and net exports (NX)?
- What are the effects of a contractionary fiscal policy abroad on the Canadian output and interest rate? [show on a separate IS-LM graph]
- What are the effects of a contractionary monetary policy abroad on the Canadian output and interest rate? [show on a separate IS-LM graph]
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Advanced Placement Microeconomics
Authors: Bill Hurd
1st Edition
1531150306, 978-1531150303
