IS-LM for an Open Economy Using the analytical framework of IS-LM and Interest Parity Relation as well as the fact that Indonesia is an open economy adopting a flexible exchange rate system, answer the following questions: a. Write down the open economy IS-LM equations and also the Interest Parity Relation b. The US economy continued to recover in the first three months of the year as businesses reopened and the government spent heavily on Covid relief for citizens. The economy grew at an annualised rate of 6.4% in the first quarter of 2021. What would be the impacts of the US economic growth on Indonesia’s: trade balance, output and exchange rate (Rupiah), if: i. Bank Indonesia does not change its policy (interest) rate ii. Bank Indonesia increases its policy rate. c. To accelerate the national economic recovery, the government of Indonesia is implementing an expansionary fiscal policy. What would be the impacts of this policy on: Y, C, I, G, NX, and domestic exchange rate (Rupiah), ceteris paribus. d. In early 2021, Bank Indonesia lowered the policy (interest) rate to help accelerate the national economic recovery. What would be the impacts of this policy on: Y, C, I, G, NX, and domestic exchange rate (Rupiah), ceteris paribus. (Note: this question is not related to question c). just answer the subpart a and b, i ask the subpart c and d on the other question! Thank you Bartleby! :D
IS-LM for an Open Economy
Using the analytical framework of IS-LM and Interest Parity Relation as well as the fact that Indonesia is an open economy adopting a flexible exchange rate system, answer the following questions:
a. Write down the open economy IS-LM equations and also the Interest Parity Relation
b. The US economy continued to recover in the first three months of the year as businesses reopened and the government spent heavily on Covid relief for citizens. The economy grew at an annualised rate of 6.4% in the first quarter of 2021. What would be the impacts of the US
i. Bank Indonesia does not change its policy (interest) rate
ii. Bank Indonesia increases its policy rate.
c. To accelerate the national economic recovery, the government of Indonesia is implementing an expansionary fiscal policy. What would be the impacts of this policy on: Y, C, I, G, NX, and domestic exchange rate (Rupiah), ceteris paribus.
d. In early 2021, Bank Indonesia lowered the policy (interest) rate to help accelerate the national economic recovery. What would be the impacts of this policy on: Y, C, I, G, NX, and domestic exchange rate (Rupiah), ceteris paribus. (Note: this question is not related to question c).
just answer the subpart a and b, i ask the subpart c and d on the other question! Thank you Bartleby! :D
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
