3. 4. 5. In a system of fairly high (but imperfect) capital mobility and a fixed exchange rate within the Mundell-Fleming open economy macroeconomic (IS-LM-BP) model, an expansionary fiscal policy can result in either a surplus or a deficit in the balance of payments. Why is it so? Explain and illustrate graphically. Present graphically and explain the shape of a standard Keynesian aggregate supply curve. Does the slope of a Keynesian aggregate supply curve vary depending on whether nominal (money) wage is variable (flexible) or fixed? Explain why and demonstrate graphically. expenditure), the Assume there is an exogenous drop in the price of imported oil. Using Keynesian graphical model and analysis, explain how such a shock would affect aggregate output and price level. Explain the role inflationary expectations play in this adjustment.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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3.
In a system of fairly high (but imperfect) capital mobility and a fixed
exchange rate within the Mundell-Fleming open economy macroeconomic
(IS-LM-BP) model, an expansionary fiscal policy can result in either a surplus
or a deficit in the balance of payments. Why is it so? Explain and illustrate
graphically.
4.
Present graphically and explain the shape of a standard Keynesian aggregate
supply curve. Does the slope of a Keynesian aggregate supply curve vary
depending on whether nominal (money) wage is variable (flexible) or fixed?
Explain why and demonstrate graphically.
Assume there is an exogenous drop in the price of imported oil. Using
Keynesian graphical model and analysis, explain how such a shock would
affect aggregate output and price level. Explain the role inflationary
expectations play in this adjustment.
5.
Transcribed Image Text:3. In a system of fairly high (but imperfect) capital mobility and a fixed exchange rate within the Mundell-Fleming open economy macroeconomic (IS-LM-BP) model, an expansionary fiscal policy can result in either a surplus or a deficit in the balance of payments. Why is it so? Explain and illustrate graphically. 4. Present graphically and explain the shape of a standard Keynesian aggregate supply curve. Does the slope of a Keynesian aggregate supply curve vary depending on whether nominal (money) wage is variable (flexible) or fixed? Explain why and demonstrate graphically. Assume there is an exogenous drop in the price of imported oil. Using Keynesian graphical model and analysis, explain how such a shock would affect aggregate output and price level. Explain the role inflationary expectations play in this adjustment. 5.
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